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.
The NFL playoffs are in full swing this weekend, so let’s get right to it …
Credits and Debits
Debit: Shortages in Venezuela are now so bad that the government has dispatched the military to protect grocery store shoppers and the distributors of dwindling consumer goods.
Debit: As Venezuela’s economy continues to collapse into the abyss, shortages of everything from beef and chicken to diapers and detergent have become chronic. The lack of goods has led to fights between desperate shoppers competing for products.
Debit: If that isn’t bad enough, grocery store employees are now threatening shoppers who snap photos of the empty shelves. I know. God help the poor supermarket patron who causes a clean-up in aisle six.
Credit: Things are so bad in Venezuela’s socialist workers’ paradise that all 100 McDonald’s there are no longer serving french fries because of a paucity of potatoes. So, no, you can’t have fries with that.
Credit: Don’t think what’s happening in Venezuela can’t happen here in the United States. It will — if the powers that be wait to reset our current financial system until after the dollar finally implodes.
Credit: The situation currently unfolding in Venezuela — and Russia too for that matter — should be plenty of incentive for you to properly prepare for what could eventually be coming to these shores. That is, unless you enjoy long lines and panicked throngs.
Debit: What’s that, you say? The US economy can never collapse? Psst. The math says it will. Most folks don’t realize that our debt-based monetary system requires ever-increasing debt to keep the game going.
Debit: Why do you think US federal student loan debt is now more than $800 billion? Seven years ago it was “just” $98 billion. And why do think 29% of all car loans are now being given to consumers with subprime credit?
Debit: Of course, no one should be surprised that the number of people who are delinquent on their car loans is rising to alarming levels — or that the default rate on all of those student loans is now 30%.
Debit: The trouble is, unlike the government, people can’t pay the bills by printing their own cash. As a result, most consumers today are either tapped out, poor credit risks — or both. In fact, 37% of Americans say they’re so deep in hawk that they’re unable to save a single penny.
Debit: If anybody tries to tell you that the American economy is reaping the fruits of a six-year economic “expansion,” ask them to explain how that’s working out for the state of Michigan, which has more food stamp recipients than students.
Debit: Meanwhile, Americans are still waiting for real wages to climb back to their 1972 high-water mark. No, really. Yes, 41 years ago.
Credit: It’s no coincidence that 1972 was the year after President Nixon closed the “gold window”, thereby fully decoupling the US dollar from the world’s ultimate money — and unleashing the fiat-money debt monster that will soon bring down the entire flawed system.
Debit: By the way, don’t hold your breath waiting for that dubious 41-year wage-streak to end: Last month, the average hourly nominal wage for all employees saw its largest percentage drop ever.
Credit: That’s terrible news, considering the US owes more than $100 trillion in debt and unfunded liabilities. At the current average hourly wage, every American employee would have to work 40 years to pay it off. And you thought taxes were high now.
By the Numbers
Yes, it’s all a charade; the US will never collect enough taxes to pay off its gargantuan debt. Today, the goal is to simply buy time by collecting only enough taxes to service the debt — but even that modest objective is getting harder to meet with each passing year.
For what it’s still worth, the latest IRS data on individual income taxes for 2012 show that the the highest income earners in America continue to pay most of the government’s bills:
$1,100,000,000,000 Income taxes paid in 2012 by 136 million US taxpayers.
22.8% Effective tax rate of top 1% of US taxpayers.
3.28% Effective tax rate of bottom 50% of US taxpayers.
38.1 Percentage of US taxes paid by the top 1% of taxpayers.
29.8 Percentage of US taxes paid by the bottom 90% of taxpayers.
3.3 Percentage of US taxes paid by the bottom 50% of taxpayers.
Source: Tax Foundation
The Question of the Week
Last Week’s Poll Result
How many times do you eat at a sit-down (non-fast-food) restaurant each month?
- Twice or less (57%)
- 3 or 4 (23%)
- More than 4 (20%)
More than 300 people answered last week’s question and the majority of them limit their away-from-home dining to twice per month or less. Over the years, as my income has increased, so has the number of times I take the family out to dinner. When our kids were smaller, we dined out once per month. Today, that number is closer to once per week. In case you’re interested, we include it as part of our entertainment expenses.
Len Penzo dot Com Insider
Later this month I will be publishing my first “Insider” post: my annual State of the Household Report. The report will include a detailed breakdown and overview of my 2014 household expenses. You can see a past example here.
Other Useless News
Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. South Carolina (3.18 pages/visit)
2. Kansas (2.37)
3. New Mexico (2.03)
4. Maine (1.97)
5. Arkansas (1.94)
46. Connecticut (1.57)
47. Mississippi (1.54)
48. Georgia (1.51)
49. Florida (1.42)
50. Montana (1.40)
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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 recently-updated Star Wars themed article on the power of compounding growth, Ray added this caveat:
The way interest is at banks today, you’ve got to have the lifespan of Methuselah to double your money.
I know. And if you consider that today’s real interest rates are negative, even Methuselah can’t win!