Black Coffee: The Economy Is Fine. (Just Don’t Look Behind the Curtain.)

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.

Merry Christmas everyone!

I know — this week’s edition is a little late.

If my boss works me any harder, I think I’m going to ask my Congressman if he would be willing to propose a bill that extends the number of hours in a day from 24 to 32. I tell ya, I’m pooped — but I don’t expect things will be slowing down until mid-February. Argh.

Anyway, as a result of these long hours at the office, and seemingly never-ending work days, I’m bringing you another espresso edition of Black Coffee this week.

Hey, no need to frown, folks: the cup is smaller, but it always packs the same punch.

Okay, off we go …

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

From December 2009:

10 Off-the-Wall Gifts for Open-Minded People – Yes, just in time for tonight’s white elephant gift exchange. You’re welcome.

Last Week’s Poll Result

Which of these gifts from the 12 Days of Christmas would you least want to receive?

  • 12 drummers drumming (28%)
  • 10 lords-a-leaping (25%)
  • 6 geese-a-laying (18%)
  • 11 pipers piping (9%)
  • 8 maids-a-milking (7%)
  • 7 swans-a-swimming (7%)
  • 9 ladies dancing (6%)

Speaking of white elephant gifts … A slim plurality of the 500 people who responded believes that the worst gift on the list is … drum roll please … 12 drummers drumming. If you ask me, my vote is for the six geese-a-laying — if only because it’s the gift that, unfortunately, keeps on giving. If you know anything about geese, you know how annoying they can be — especially when it comes to their squawking and the massive dog-sized droppings they like to liberally deposit everywhere.

Credits and Debits

Credit: Much to my surprise, the Fed announced on Wednesday that it would begin “tapering” its $85 billion per month quantitative easing (QE) campaign. Even so, the magnitude of the initial taper was hardly worth mentioning: $10 billion.

Credit: The stock markets certainly approved. In fact, investor sentiment in the Dow and S&P 500 led both of those indices to finish the week at record levels. Again. For the year, the Dow and S&P are both up more than 20%, and the NASDAQ has gained almost 35%.

Debit: That kind of performance should signal a booming economy that’s firing on all cylinders — but if that’s so, then why has the Fed decided to continue propping up the economy in 2014 with even more monthly cash injections? Strange.

Debit: So let’s put the taper in perspective: Instead of pumping $1 trillion into the economy each year, the Fed will now be pumping $0.9 trillion. Big deal. As this graph shows, it took the Fed almost 100 years to add the first $0.9 trillion to the monetary base — now they’re adding that much every year.

Debit: And another thing: Why is the Fed now moving their unemployment goalposts? In 2012 they promised to keep interest rates low “at least as long as unemployment remained above 6.5%.” This week they announced a new marker that’s “well past the time” it drops below 6.5%. Odd.

Credit: Low interest rates typically signal a weak economy. If ours was truly healthy — and as strong as some disingenuous Pollyannas would have you believe — then the Fed should be allowing interest rates to move much higher than they currently are.

Debt: Maybe the Fed is worried about US mortgage applications falling to their lowest point in 13 years — even though a truly-booming economy should create more than enough good-paying jobs to keep an event like that from happening.

Debit: Or perhaps they are painfully aware of the fact that there are now more Americans on welfare than working full-time. That shouldn’t be the case in a healthy economic climate.

Debit: Then again, maybe they saw the dismal November dealer sales figures for economic bellwether Caterpillar, which has posted negative retail sales worldwide for two months in a row. Prior to October, the last time Caterpillar saw global negative retail sales was in February 2010. Gulp.

Credit: Of course, that didn’t stop Caterpillar’s stock from climbing more than 2% last week. Hey, all that money being created by the Fed has to go somewhere. Besides, Jim Cramer thinks it’s a buy.

Debit: According to Jim Grant, the Fed has manipulated the markets so badly that the price discovery mechanism is broken. As such we’re now stuck in an economic “hall of mirrors” where prices are so distorted that it’s impossible to recognize true value anymore.

Credit: Well, on a bright note, more Americans are waking up — at least a little bit. A recent Gallup poll found that 72% of Americans now say the biggest threat to the country is Big Government; in almost 50-years of polling, that’s the highest level ever.

Debit: Frankly, I’ll believe a majority of Americans really feel that way only after I see meaningful signs that prove it. Besides, the damage, unfortunately, is done. At least for now.

The Question of the Week

Sorry, there are no polls available at the moment.

(The Best of) By the Numbers

4 Days until Christmas.

2   The number of US paper currency bills currently in circulation that do not feature a US president. ($10: Alexander Hamilton; $100: Benjamin Franklin)

30 billion   Amount of Monopoly money printed each year by game’s manufacturer, Parker Brothers.

$974 million   Amount of money printed by the US Bureau of Engraving and Printing last year. (That’s not to be confused with all of the money that’s being created out of thin air by the Fed.)

95 Percentage of money printed by the US Bureau of Engraving and Printing each year to simply replace old and worn-out bills.

9 Lifespan (in years) of the average $100 bill. (The lifespan of a $1 bill is 22 months.)

$250,000 Amount of counterfeit US money that is found each day.

91 Percentage of copper in a US quarter. (The rest is made of nickel.)

1 Percentage of all US paper currency currently in circulation that is $2 bills. (When is the last time you spent one of those?)

Source: CNBC

Other Useless News

Here are the top — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:

1. Manitoba (3.01 pages/visit)
2. Prince Edward Island (2.74)
3.  Nova Scotia (2.67)
4. Alberta (2.59)
5. Newfoundland (2.58)

9. Saskatchewan (2.05)
10. Ontario (1.91)
11. Quebec (1.88)
12. Northwest Territories (1.25)
13. Nunavut (1.00)

Whether you happen to enjoy what you’re reading (like the crazy canucks in Manitoba, eh) — or not (you hosers living on the frozen Nunavut tundra) — please don’t forget to:

1. Click on 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! You can reach me at: Len@LenPenzo.com

My claim that most people who can’t live on $40,000 per year have nobody to blame but themselves inspired Ann Carp to leave this counterpoint:

You are a pompous know-it-all.”

Well, Ann … that’s part of my charm.

I’m Len Penzo and I approved this message.

Comments

  1. 3

    says

    Very interesting and informative for a pretty ignorant chap here in Manchester, England. I also enjoy your writing style – Off beat with a punch.
    By the way I voted for Spring as my favourite season but everyone seems to love autumn (fall). It’s funny that no one is voting for the cold of winter, now that we are in it :)
    Thanks
    Alex

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