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.
And away we go …
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
— Winston Churchill
There are three things in the world that deserve no mercy: hypocrisy, fraud, and tyranny.
— Frederick William Robertson
Credits and Debits
Debit: Want more evidence that the world’s financial system is an unmitigated fraud? Since the 1960s, Germany has claimed that 70% of her 3396 tons of gold reserves were stored at major central banks in New York, Paris, and London. But a Bundesbank news release now admits their offshore-gold likely never existed in physical form — only via accounting book entries.
Debit: That bankster subterfuge helps maintain confidence in the world’s over-printed fiat currencies by suppressing the true price of the yellow metal. The rehypothecation of existing gold stores permits creation of paper claims for physical metal that far exceed available supply. It’s modern-day alchemy — and it’s deeply immoral.
Credit: Fortunately, the Bundesbank’s admission proves banksters are rapidly running out of the unencumbered physical gold needed to keep their con game afloat. But when that day finally arrives, the international monetary system will violently correct itself, living standards will fall — and those without physical precious metals in their possession will discover they’re not as wealthy as they thought.
Credit: Did you see this? A Chicago man is suing McDonald’s. No, not for indigestion. It’s because he discovered that the cheeseburger “extra value” meal sold at his local Mickey D’s — which includes two cheeseburgers, medium french fries and a drink for $5.90 — is 41 cents more than the individually purchased items. Good for him. After all, it is deceptive advertising.
Debit: I bet that guy from the Windy City wouldn’t have bothered to lawyer-up if he had one of those gold-plated government pensions like the ones civil “servants” get in El Monte, California; people working in the private sector certainly wish they did.
Debit: One retired El Monte city manager currently collects $250,000 per year; another retiree gets $216,000. And both get annual “cost-of-living” increases of up to 5%. As for the city’s taxpayers, well … they get the shaft.
Debit: Of course, the El Monte politicians who authorized those ridiculous pensions don’t have a monopoly on corruption. Last week the European Central Bank lowered Deutsche Bank’s capital requirements so the teetering bank could pay out millions in bonuses to its managers — yes, the same ones who have guided Deutsche Bank to the brink of bankruptcy. No, really.
Debit: By the way, 28% of El Monte’s taxes go towards retiree pensions. You know what that means: they’ll soon be adopting a soda tax like the one recently passed by the politicians morons in Philadelphia. Thanks to a 1.5-cent per ounce levy on sugary drinks, residents there now pay $3.69 for a gallon jug of sweetened tea priced at $1.77. Uh huh. That’s a 108.5% tax. Still, no revolution. At least not yet.
Debit: Unfortunately, Philadelphia isn’t alone. San Francisco and Oakland followed Berkeley’s lead by approving a similar penny-per-ounce soda tax. Will the Big Government suffragists control freaks in the Bay Area who agreed to this kind of highway robbery ever get the courage to stand up, shed their chains, and tell their tyrannical masters enough is enough?
Debit: Then there are the voters numbskulls in Boulder, Colorado — they just passed a two-cent per ounce levy on sugary drinks. Yep. For you taxpayers counting at home, that’s an extra $1.35 consumers must pay on every two-liter bottle. Unbelievable. I’d ask what Colorado’s electorate is smoking … but I already know.
Credit: Speaking of Colorado, I see restaurants there are planning to eliminate more waiters in response to a recent increase in the minimum wage. It’s just more proof that government can’t legislate higher standards of living by the mere stroke of a pen.
Credit: Here’s a better idea, Colorado: cut your government bureaucrats by half, and sharply reduce taxes. Boulder can start with their sugary-drink levy.
Debit: It’s not just waiters whose jobs are suddenly in danger. While manufacturing and fry cook jobs are already being replaced by robots, it turns out that white collar workers are suddenly vulnerable too, as evidenced by the life insurance company in Japan that will soon replace claim adjusters with a software robot from IBM. What job will the machines take next?
Credit: Finally … a prospective homebuyer found a mummified body in a Detroit garage last week. Heh. Crazy, isn’t it? No … not the mummy — the fact that there are still people who are actually looking to buy a home in Detroit.
By the Numbers
Believe it or not, I only saw one of the 10 biggest movies of 2016, listed here for the curious. Can you guess which one?
1. Finding Dory (US domestic gross: $486 million)
2. Rogue One: A Star Wars Story ($424 million)
3. Captain America: Civil War ($408 million)
4. The Secret Life of Pets ($368 million)
5. The Jungle Book ($364 million)
6. Deadpool ($363 million)
7. Zootopia ($341 million)
8. Batman vs. Superman: Dawn of Justice ($330 million)
9. Suicide Squad ($325 million)
10. Doctor Strange ($230 million)
Source: The Numbers
Insider Notes: “Creditism” vs. Capitalism
I’m putting the final touches on my annual State of the Household, Net Worth and Annual Expenses article for you, which I plan to publish this coming Friday.
In the meantime, I wanted to share a brief — but really important — insight on something called creditism. You’ve probably never heard of the term, but it is precisely why our international monetary system is on its last legs.Hey! You need to be an Insider to view the rest of this section! If you’d like to join, please click “Insider Membership” at the top of my blog page.
Last Week’s Poll Results
Do you think 2017 will be better or worse than 2016?
- Better (58%)
- I’m not sure (22%)
- Worse (20%)
More than 1200 Len Penzo dot Com readers responded to last week’s question and nearly 3 in 5 of them think this year will be better than 2016. Optimism clearly reigns in 2017 — we shall see. In any case, the results represent a big improvement from last year’s poll: at the time, just 44% of respondents said they expected 2016 to be better than the year before it.
The Question of the Week
[poll id="145"]
Other Useless News
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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 out to me at: Len@LenPenzo.com
After reading my article on how six tiny money leaks cost me $1702, Woody left this comment:
Two dollars a day for lunch? Surely that’s a typo.
Um … Did somebody send you pictures of me at the last company picnic?
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
Finding Dory.
Really, Wilson? No.
I was playing the odds.
Captain America.
Your coffee was a really good this morning Len. Have a great weekend!
Sara
You too, Sara! And no to Captain America.
Excellent article. Nobody needs to earn $250,000 a year in retirement. Nobody. The 5% COLA is over the top too. These people are living like royalty why their subjects struggle to get by.
I’m guessing Doctor Strange.
Thanks, ND. To tell you the truth, I’m not even sure what Doctor Strange is about … I appreciate the guess.
Len,
Seems the financial system is getting crazier by the day! I read the colonists began the Revolution for a much smaller tax being pressed upon them by England then what the American citizenry has to pay now. We have all truly become sheep! I wonder if the collapse will begin First or the citizens revolt, sadly things will most likely collapse before the sheep take action. I read Larry Edelson predicts a new monetary system being installed in 2020, not really sure how it lasts that long, but hey it might never happen because Trump is here and Happy Days are here again. Dow 20,000 is coming this week and with it the sheep become even more blind!
Watching with confusion.
Jared
Jared, I say collapse comes before the sheep wake up.
I think Edelson overestimates the soundness of the international financial system. I’ll be surprised if the current system makes it past 2018; I won’t be surprised if it falls this year. There just isn’t enough good collateral left in the world to continue the expansion of debt that is required to keep the Ponzi going. Too many people are beginning to question the system’s integrity.
As for Trump … although he may be able to temporarily improve economic conditions, there’s nothing he can do to save the current debt-based monetary system — it is broken beyond repair. Math is a bitch.
The only way to avoid collapse at this point is if the powers-that-be (i.e., the G7 or G20, plus the BIS) meet beforehand and agree to a new international monetary system. Regardless, that meeting is going to happen; the only question is whether those powers are proactive or reactive.
It seems the metals manipulation has been going on for quite a while, going as far back as even the 60s. I still think all this manipulation began under the Johnson administration and his welfare state! He was able to take advantage of the Federal Reserve, which should never have been instituted in the first place. I find it amazing the amount of corruptness and immorality in our government!
Unfortunate but true. It seems that corruption and immorality is a character prerequisite for anyone who plans to run for, or currently “serves” in public office, or in the many bureaucracies created on the people’s dime.
Hey Len, was it Rogue One?
Nope, Peter. Thanks for guessing!
Agree, Jared. LBJ’s multi-trillion “War on Poverty” was the tipping point that led to Nixon closing the gold window … it’s been all downhill from there.
Curious what you think the next monetary system will be. I agree, one is coming. Thing is, I wouldn’t be surprised one bit if the next one is still fiat. Probably reserve currency will be the SDR or some other IMF creation, which is still fiat. So, essentially, they’ll replace one issue with a new one. Thoughts?
Jim Rickards (author of Currency Wars, The Death of Money, The Road to Ruin, The Case for Gold and is a “monetary insider”) insists that the plan is to use SDRs to reliquefy the system one last time. I believe him — but I see two problems with that:
1. it doesn’t fix the current problem; by keeping the current debt-based monetary system in place, it only kicks the can down the road
2. They may add a gold component to the SDR basket, but even so … since, as you correctly state, the rest of the SDR basket is just a collection of the same worthless fiat currencies, there may not be enough confidence for it to be accepted
By the way, if SDRs are implemented, the dollar will be toast; the buck will most likely lose at least 30% of its purchasing power almost immediately, and then degrade further after that, due to its loss of reserve status. In essence, it will become a local currency — no different than the Mexican peso.
Of course, the best solution is a return to honest money: a system backed by gold and silver. But governments hate that because it limits their ability to live beyond their means.
Yep, agreed. And I just picked up a copy of Currency Wars so will be digging in. Find the subject quite interesting. I’m also quite intrigued at the prospect of Bitcoin and other free market, decentralized currencies. Could introduce currency competition, but driven by the free market. I can see very positive things coming from all that. While Bitcoin “isn’t backed by anything” in the traditional sense, the design of it makes it pretty immune to the same kinds of issues regular fiat currencies see.
Rickards knows what he is talking about. I have all of his books. I thought they were all very good except for ‘The Road to Ruin’ — I thought that one was less compelling than his other books, although ‘Ruin’ did change my mind about the importance of tariffs and protectionist trade policies; I thought he made an excellent case for why they would actually be beneficial to the US and, to a lesser extent, the other developed economies.
As for Bitcoin, it is intriguing and has a lot of upside potential as an investment (if you can stomach the volatility). Still, I have trouble gathering my head around any overarching advantage it may have over gold (and, to a lesser extent, silver) as a store of value.
Appreciate the dialog, David. Nicely done!
Nice blog, it’s well written. Thank you!
Hello Len,
I like your blog, lots of facts! Just amazing all the stuff that goes on….
New reader here. I found you through one of my friends who linked to this on Facebook. Appreciate the eye opening commentary.
Awesome, Jim! Please thank your friend for me. I am grateful whenever anyone spreads my articles on the web.
I depend on people like your friend to expand my audience!