Black Coffee: Leg Men, Optimistic Barflies and Nitwit Economists

It’s time to sit back, relax and enjoy a little joe

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance. Here’s what caught my attention over the past week…

I hope everybody had a great Thanksgiving. I know I did!

With that said, let’s get right to it this week.

Blogs I’ve Been Following This Week

The Frugal Toad 10 Frugal Ways to Save on Food. I’m always looking for new ways to cut back on my grocery bill. Here’s a bonus tip that didn’t make the list: eat less.

Yes, I Am Cheap I’m Anti-Black Friday This Year. Says Sandy: “I had the pleasure of walking through Walmart the other day.” You know, I don’t think I’ve ever used the words “pleasure” and “Walmart” in the same sentence. Well, until just now.

Budgets Are Sexy The “Sticky Note” Method of Budgeting. Uh huh. Just when you thought there was nothing else that could possibly be done with Post-It notes — there’s this. Very clever!

Don’t Quit Your Day Job The Moral Case Against Price Controls. I stated in last week’s Credits and Debits several reasons why price controls are bad for society. This week, Paul gave an excellent example that proves my point.

Financial Uproar Can You Please Stop Buying Drinks for Girls? In this very amusing piece, guest author Martin explains why buying drinks for girls is a losing proposition for single guys. (Psst. Martin. It’s usually a losing proposition for married guys too.)

The Way-Back Machine: Past Posts Of Mine You May Have Missed

From November 2009:

Flexible Spending Accounts Provide Free Money. Why Pass Them Up? – With healthcare costs rising faster than ever before, you need every advantage you can get. Maybe you should consider a Flexible Spending Account.

Credits and Debits

Credit: Although Thanksgiving has been celebrated in the United States since the founding of the Republic, it didn’t become an official holiday until Abraham Lincoln’s presidential proclamation in 1863.

Debit: Lincoln set Thanksgiving as the last Thursday in November. However, in 1941 with prodding from Franklin Roosevelt, Congress tossed almost 100 years of tradition out the window and set Thanksgiving as the fourth Thursday of the month.

Debit: For some odd reason, FDR naively assumed the date-change would somehow boost a stagnant US economy that was still suffering after eight years of his failed big-government New Deal policies. It didn’t.

Debit: Speaking of languishing economies, more Americans used food stamps this year to buy their Thanksgiving dinners than ever before. Over the past five years, the number of people on food stamps has increased 70%.

Debit: Meanwhile charities are seeing increased requests for help. One particular food pantry in Boston has seen requests for free Thanksgiving turkeys and other holiday food assistance increase 400% over the previous year.

Credit: In other news, mortgage rates have once again hit an all-time low. You can thank the Fed, which has been suppressing rates to help the government afford the trillion-dollar deficits it’s been racking up over the past four years. At least temporarily.

Debit: The continued economic uncertainty generated by that debt has resulted in plunging corporate investment plans for next year. That’s not a good sign for those looking for robust economic growth or higher stock market returns in 2013.

Debit: Ranchers and farmers are gloomy too. Many fear they’ll be unable to pass their ranches on to their heirs after the so-called “death tax” increases from 35% to 55% on January 1. The exemption is being reduced too; from $5 million to $1 million.

Debit: It gets worse: If all the federal tax cuts expire as scheduled at the end of this year — the so-called fiscal cliff   — then the median four-person household earning $74,563 will see its taxes rise 4.32% next year. That’s $3,222 less in your wallet next year.

Debit: Then again, liberal economist Paul Krugman is intimating that what we really need is a return to the 91% marginal tax rate on “the rich” that was in effect during the booming 1950s. I know.

Credit: Of course, the biggest trouble with Mr. Krugman’s assertion is that, today, anybody making over $250,000 is considered “rich” for tax purposes. In 1955, the 91% rate was only triggered after one earned the inflation-adjusted equivalent of $27 million.

Credit: In fact, back in 1955, one had to earn about $1.35 million in 2012 dollars to reach the 38% tax bracket. In 2013, the new 39.6% top tax bracket will officially kick in at just $388,350. Despite this, Krugman suggests taxes aren’t high enough today. Unbelievable.

Debit: Last week, Timothy Geithner doubled down on the fiscal insanity with a “brilliant” idea of his own: completely eliminate the debt ceiling. Remember, this is coming from our US Treasury Secretary. We’re truly on a downward spiral.

Credit: There are others who believe racking up debt to pay for massive entitlements and programs we can’t afford has no consequences. But it’s pure folly to believe the dollar will remain the world’s reserve currency if the US continues to spend with impunity.

Debit:  So, what, you say? Keep in mind that when the government’s reckless spending policies finally cause the US dollar to lose reserve currency status, all but the wealthiest Americans’ standard of living will drop precipitously.

Debit: Loss of reserve currency status will mean prices for almost everything in the US could double. Then, if the “fit really hit the shan,” prices could eventually double again — and then double yet again. How would that affect your grocery bill?

Debit: If most Americans realized this, it wouldn’t be long before we returned to the days when the federal government was much smaller. Unfortunately, they don’t. And so, sadly, we’ll continue the charade until the economy finally collapses. We’re almost there. Get ready.

Debit: Finally… A nine-year-old Ukrainian boy is in deep borscht after he discovered his parents’ life savings of $3900 hidden under the sofa and spent it all on candy. That’s a lot of money in a country where the gross per capita income is just $3120 annually.

Credit: Obviously, that story gives new meaning to the term “eating your parents out of house and home.”

By the Numbers

Here are a few facts on the so-called “fiscal cliff,” a woefully misguided — not to mention futile — effort to head off the eventual collapse of the US dollar:

$14,000 According to one estimate, the amount the top 20 percent of all wage earners would pay, on average, in annual taxes. (Scary, if true.)

$412 Amount the lowest 20 percent of all earners would pay on average in additional taxes.

30 Millions of taxpayers who will be hit by the alternative minimum tax. (That’s up from 4 million.)

$16,291,454,232,729 The current National Debt.

$1,420,000,000,000 The budget deficit in 2012.

0 Number of budgets the US Senate has passed since 2009.

$110,000,000,000 Amount of mandatory spending reductions in 2013.

$500,000,000,000 Amount of additional revenue that will be raised from the new taxes that will be implemented.

0 Common sense of any politician who believes raising taxes is part of a “balanced approach.” (They’re the same ones who can’t see that the government has a spending problem, not a revenue problem.)

$901,000,000,000 The projected 2013 budget deficit — even after going over the fiscal cliff.

Contributing Source: The Boston Globe

The Question of the Week

Sorry, there are no polls available at the moment.

Last Week’s Contest Winner

Congratulations to Sarah, who won a $20 Starbucks gift card! She was one of only three people who correctly guessed that the only Top 10 movie of 1982 that I haven’t seen (and never will) is The Best Little Whorehouse in Texas. Her name was pulled in a random draw among all the correct guessers.

Thanks to everyone who participated. I’ll have another contest next month.

Other Useless News

Here are the top 5 articles viewed by my 3336 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):

  1. The 7 Most Popular Ways to Commit Financial Suicide
  2. 100 Words On: Why Most Early Risers Wake Up Smiling
  3. The Unexpected Bill That Added $2406.88 to My Vacation
  4. The Emperor Has No Clothes: Why In-N-Out Burger Is Overrated
  5. 6 Basic Steps to Help You Achieve Financial Freedom

Each month I post some of the more curious search terms visitors entered into Google’s search engine (according to Google Analytics) that led them, somehow, some way, to Len Penzo dot Com:

  • can i run over a nail to take advantage of a tire warranty?
  • what does 13-5 a key mean cocaine? [sic]
  • can i use a whirlpool tub to take a shower?
  • len penzo throwing up on bus
  • how do I get a family member to pay me back now that shes [sic] living the high life on money I loaned her?

Hey, no matter how you got here, please be sure to:

1. Click that “Like” button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!

2. Make sure you follow me on Twitter!

And last, but not least…

3. Don’t forget to subscribe to my RSS feed too! Thank you. :-)

Letters, I Get Letters

Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not!

Jen took a moment to pass along Thanksgiving greetings to me and my family. She also tossed in this age old question:

I have to ask. Do you prefer white meat or dark?

I prefer dark meat, Jen. I’ve always been a leg and thigh man. (Yes, I realize a lot of guys say the exact same thing over at  

I’m Len Penzo and I approved this message.


  1. 2

    joe pfautz says

    will you stop with the conservative cant. if the financial cliff comes it might stop dorks like you from spending 2500 on hockey tickets. I’m retired and still spend over 8k a year in fed taxes. I have no deductions and pay my fair share are you taking deductions? we need to spend less and pay down the natl debt. It means pain for all.

    • 3

      Len Penzo says

      First off, Joe, the US Treasury takes in over $2 trillion in revenue annually. That’s more than enough to pay for the Constitutional duties of the federal government — and then some. How much more do they need from us? The obvious answer to those willing to open their eyes is: There will NEVER be enough revenue because the politicians can’t control their spending.

      Secondly, I’ve been espousing my fiscal conservative point of view on this site every weekend for almost four years now. If you don’t like what I have to say, you are free to stop reading it. After all, what did you expect from the “personal finance blog for responsible people”?

      Third, you contradict yourself. In one breath you ask that I stop with the “conservative cant.” But then you correctly espouse the conservative position that “we” need to spend less and pay down the national debt.

      So let’s make sure we agree on the definition of “we.”

      There’s a big difference between me spending $2500 on hockey tickets and the government running up trillion dollar deficits each year. Those tickets weren’t bought on credit. See, unlike the US government, I don’t borrow money to buy things I can’t afford.

      When you say “we” need to spend less and pay down the national debt, I hope you are referring to the “government” and not private citizens like me who choose to responsibly use our hard-earned disposable income on whatever we please. (Of course, that’s after the government taxes the income and the Fed reduces its purchasing power even further via reckless inflationary policies.) Otherwise, I think you need to reevaluate who the real dork is. Just sayin’.

    • 6

      Volfram says

      Hey Joe, why don’t you go tell Hillary Clinton to stop being a woman next. Or tell FDR to stop being dead. Or tell Obama to stop being black.

  2. 7


    Thanks for the mention brotha – hope you and the fam had an awesome Thanksgiving :) Can you believe we’re still blogging after all these years? Love it.

    • 8

      Len Penzo says

      I know. I never thought I’d still be doing this four years later. Happy holidays to you and your family too, J!

  3. 9

    Chris says

    Another great Cup of Joe… Keep up the good work. I am curious – do you listen to Larry Elder on KABC790? Your “fit really hit the shan” comment is something he uses quite often (or used to anyway, I now live in Austin, TX and do not get his show).

  4. 13

    Martin says


    I like your blog and respect that you clearly have your finances together from a microeconomic perspective. However, you clearly don’t understand some key macroeconomic principles that are at work today. Please note that I’m not criticizing the conservative perspective – there’s a lot to be said for maintaining a small government – but you are just plain wrong about several things.

    Fiscal expansion in a liquidity trap is not inflationary. You talk about the Fed’s policies leading to crazy inflation, but where are the results to back you up? The Fed has been printing money to counteract the recession for years, but inflation is consistently BELOW the 2% target rate. Things are different when we’re up against the zero lower bound.

    Also, please drop the talk about how we should look to Greece to see where we are headed. The problem with Greece is that they can’t print their own money and other countries are charging them astronomical interest rates to borrow money. The real interest rate on us debt is NEGATIVE; other countries will pay us to borrow money! The bond vigilantes aren’t a threat to us.

    Please read some Keynesian economic texts – the economists who have been working from that perspective over the last four years have been right, while their opponents have been wrong.

    • 14

      Len Penzo says

      “Please read some Keynesian economic texts — the economists who have been working from that perspective over the last four years have been right, while their opponents have been wrong.”

      Thanks for your comments, Martin. But let me get this straight: I’m all wet because the Fed has managed to continue its “free lunch” policies without catastrophic repercussions so far? That is, to put it nicely, a very weak argument.

      In fact, that’s exactly what people say before every bubble bursts.

      I am aware of the Keynesian economic theory. But I am also wise enough to know that there is no such thing as a free lunch. History has proven that time and again.

      Of course, we will carry on the charade — and the Keynesians will continue to claim they are right — until enough people begin to realize that trying to solve a debt problem by going deeper into debt only serves to hasten the devaluation of the fiat currency. When we have finally printed enough dollars to sufficiently devalue it, then nobody will be willing to lend us money anymore for obvious reasons. That’s when the economic house of cards we’ve been building since 1913 will finally come crashing down.

      What’s funny is even Mr. Bernanke knows the jig is up. He’s just trying to prolong the game of musical chairs as long as he can.

      When will it happen? I can’t say for sure, but it’s going to happen unless we change our M.O. — and fast. And, yes, once the economy collapses, there will be riots and civil unrest here by the unemployed and other folks whose lifetime savings will have been wiped out by reckless Keynesian fiscal policies. Those who will, in general, be unable to afford $10 loaves of bread and $12/gallon gasoline (assuming that stuff is even available) will be rioting too. To say that can’t happen here is not unlike those who said the housing market wouldn’t collapse, as it surely did back in 2007-2008.

      Yes, it can happen here — and it will if we don’t wake up.

      By the way, price inflation is everywhere. And it’s getting worse for those who are willing to look for it. Never mind that the dollar has lost 98 percent of its value since 1913. Have you seen commodity prices over the past few years — they’ve gone through the roof!

      Thanks again for your counterpoint.

      • 15

        Martin says

        I’m sorry, Len, but price inflation is not everywhere. The Bureau of Labor Statistics gives the following data for CPI changes (including food and energy):

        May 2012: -0.3
        June 2012: 0.0
        July 2012: 0.0
        August 2012: 0.6
        September 2012: 0.6
        October 2012: 0.1

        Where’s the runaway inflation?

        • 16

          Len Penzo says

          We’ll all know when the runaway inflation gets here, Martin — for now, it’s only high inflation.

          Those inflation numbers you show are as bogus as the government’s U3 unemployment figures. Ask anybody who shops on a weekly basis for food and gasoline. Remember, the government has a vested interest in fooling its citizens into believing there is no significant price inflation. “Move along, folks, nothing to see here …”

          Here’s another real-world data point: Take a look at how much the prices of simple brown bag sandwich ingredients jumped in just the past year (based on my annual survey I’ve been doing for the past four years):

          Most of the 18 ingredients in my survey jumped in price by 40% or more from the previous year. Cheddar cheese prices jumped 137%!

          So what are you going to believe, the bogus government data or your lying eyes?

          • 17

            Martin says

            Thanks for providing the link to your survey; I checked it out before responding.

            I’m certainly not going to believe the inflation numbers for everything purchased across the economy for the whole country over a sample of a few food items purchased at a single grocery store in Southern California. I think that sample is too tiny to even qualify as a small sample. What were the prices for those goods at other stores in your town? What about in the rest of California? What about Minnesota? North Carolina? New Jersey? What about clothes? Toys? Tools? Books? Appliances?

            Ultimately, if you think there’s a government conspiracy going on, I can’t say anything that would change your mind. Conspiracists will believe what they want, even in the face of facts that completely disprove what they are saying.

            • 18

              Len Penzo says

              I’ve been surveying the same products at the same store for the past four years. I’m not comparing apples to oranges. You can’t pooh pooh those data away so easily.

              I’ve been closely tracking all my expenses for the past 15 years. Of course, some prices go up and some go down but, overall, the prices for the things that matter most (food and energy, especially) have been rising at an alarming rate for the past five years. The proof of that can be seen in the data that shows Americans’ standard of living has decreased over that time. I don’t have a link, but you can Google it.

              Go ahead, Martin. Continue to deny, deny, deny at your own peril in the face of obvious evidence. None are so blind as those who refuse to see.

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