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.
Let’s dive right in this week …
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
— Alan Greenspan
Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.
— Sam Ewing
Credits and Debits
Credit: Tax season is upon us, so I’m sure most US taxpayers will be happy to learn that the IRS is no longer rejecting taxpayer returns that fail to answer Obamacare-mandated health insurance questions. Well … that’s one less bureaucratic nightmare Americans have to endure.
Debit: Speaking of bureaucratic nightmares, I see the European Union has reasserted their tyrannical intention to ban cash. They insist the ban is to thwart terrorism and crime; the real reason, of course, is to support absurd negative real (as opposed to nominal) interest rates and eliminate the risk of institution-toppling bank runs.
Credit: Then again, considering that the euro is already a lost cause, the bankers’ ulterior motives shouldn’t be a surprise to anyone. Fortunately, the euro’s demise isn’t too far off — and that should make the EU’s war on cash a moot point.
Credit: Last week, Bank of England governor Mark Carney warned that “the central banks’ 15 minutes of fame was almost over.” As if to drive home that point, this week Federal Reserve Vice Chair Stanley Fischer admitted the Fed has no idea what comes next. I’ll tell you what comes next, Stanley: a currency crisis, followed by a new monetary system. Bank on it. (Sorry, I couldn’t resist.)
Credit: Then again, the Fed has never been good at predicting the future — or even observing the present. After all, as John Maudlin correctly observes, “The Fed not only failed to predict the recessions of 1990, 2001, and 2007 — it didn’t even recognize them after they had already begun.” Yeah, but on the bright side, the Fed’s track record can only improve from here!
Debit: Meanwhile, US Treasury receipts just turned negative for the first time since the 2008 financial crisis. Why is this important? Because since 1970, every time government receipts turned negative on an annual basis the US was either on the cusp — or already in the midst — of a recession. Uh oh.
Debit: Here’s another sign of an impending recession, not to mention a downturn in the housing market: January saw the largest spike in mortgage delinquencies in seven years, and delinquencies for those low-downpayment FHA mortgages that are a favorite of first-time homebuyers jumped for the first time since 2006. Double uh oh.
Debit: Meanwhile, the US government announced that its inflation indicator for January showed its biggest increase at the wholesale level in four years.
Debit: I hear you: Wholesale price increases don’t guarantee higher consumer prices. Unfortunately, last month the government’s consumer price index rose at the fastest pace in five years too. Too bad the problem was simultaneously compounded by falling real wages.
Debit: Let’s see … what do you get when the economy suffers from an increasing inflation rate at the exact same time it’s mired in a recession? President Jimmy Carter knows; it’s called “stagflation.”
Debit: The good news is stagflation can be killed, but it requires a two-pronged approach: raising interest rates to stop inflation and increasing deficit spending to eliminate the economic stagnation. The bad news is, unlike in 1980, the National Debt is so large now that’s no longer a realistic solution.
Credit: By the way, as Craig Hemke points out, it’s not as if inflation is suddenly appearing out of the blue; it’s been here all along. What’s changed is that inflation is threatening to get out of hand. As a result, officials are unmasking their inflation data because they need it to justify additional interest rate increases.
Credit: In case you haven’t noticed, Craig wears the same tin-foil headgear that I do. His just happens to be in the shape of a cowboy hat. I prefer propeller beanies.
Credit: Finally … Kyrgyzstan’s National Bank governor is urging all of his fellow citizens to save at least 3.5 troy ounces of physical gold. Yes, a central banker actually said that. Either hell has officially frozen over — or he knows the current monetary system end game is upon us.
Debit: Eventually, you may hear a similar plea from the Fed too. However, by the time you do, you can bet they’ll once again be a day late — and trillions of dollars short — because, thanks to Gresham’s Law, there won’t be any yellow metal available. Think about that. Please.
By the Numbers
Valentine’s Day has officially come and gone. Here is a closer look at some of the numbers behind the holiday:
$136.57 Amount the average person spent on Valentine’s Day this year.
54 Percentage of Americans who celebrated the holiday in 2017.
$1,900,000,000 Amount consumers spent on Valentine’s Day candy this year.
20 Percentage of consumers who bought jewelry as a Valentine’s Day gift in 2017.
250,000,000 Roses that were grown specifically for the holiday.
$2,000,000,000 Amount consumers spent on Valentine’s Day flowers this year.
190,000,000 Number of Valentine’s Day cards that were exchanged in 2017.
$1,000,000,000 Amount consumers spent on those Valentine’s Day cards this year.
Source: ABC News
The Question of the Week
Last Week’s Poll Result
Are you expecting an income tax refund this year?
- Yes (52%)
- No (48%)
- I’m not filing a tax return this year (0%)
Well … the 1300 people who answered this week’s survey question are almost evenly split when it comes to whether or not they’ll be getting money back from Uncle Sam this year. However, what I found most curious was just four (!) of those respondents said they weren’t filing a return for the 2016 tax year. Really? Surely that number should be a bit higher than that. I wonder if some people were afraid to answer that question because they think I’m a secret agent for the IRS, or … something.
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. Saskatchewan (1.82 pages/visit)
2. Alberta (1.74)
3. British Columbia (1.68)
4. Manitoba (1.65)
5. Nova Scotia (1.62)
9. Yukon Territory (1.50)
10. Newfoundland and Labrador (1.27)
11. New Brunswick (1.23)
12. Prince Edward Island (1.21)
13. Northwest Territories (1.20)
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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 me at: Len@LenPenzo.com
After reading my piece on why you should never buy a timeshare, R added his two cents to the conversation:
It’s exactly the same as phoning a hotel and letting them put charges on your credit card in case you ever decide to go there. That’s stupid.
It’s amazing how many people end up selling their soul to high-pressure timeshare salesmen when all they really wanted was a free set of steak knives.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c