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 get right to it this week …
Credits and Debits
Credit: Last month, Warren Buffett noted that the US economy was “not booming,” but “not bad” either. And a recent headline in the Columbus Dispatch proclaimed that the current economy “reflects buoyant consumer (and) business spending.” Hooray! I think.
Debit: For its part, the Commerce Department announced this week that the US GDP climbed 1.5% last quarter. One word: meh.
Debit: If the economy isn’t on death’s door, then somebody needs to tell Janet Yellen, because this week the Fed declined to abandon its seven-year-old zero-interest rate policy (ZIRP) crutch that continues to punish savers and retirees at the expense of borrowers. You know … borrowers like the US government.
Credit: And while Ms. Yellen suggests a gradual return to “normal” interest rates — 5% to 6%, historically — is coming, financial analyst and author Bill Bonner says, “Don’t believe it. The entire system depends on abnormality: ZIRP, quantitative easing (QE), and negative interest rates.” He’s right, you know.
Debit: Speaking of retirees, for only the third time since 1985, Social Security recipients won’t be getting a cost of living allowance (COLA) next year — despite increasing rent, utility, healthcare and grocery bills. No, really.
Debit: Oh, and if the Motley Fool is correct, then Social Security recipients shouldn’t expect much of a COLA increase in 2017 either. Hey … don’t shoot me: I’m only the messenger.
Credit: Seniors aren’t the only ones frustrated with declining purchasing power: A Georgia man was arrested last week after going into a rage at a local Waffle House because they raised the price of their sausage biscuits from $1 to $1.50. The good news for him is food at the county jail is free.
Debit: According to the Senior Citizen’s League, over the past 15 years, Social Security recipients have lost 25% of their purchasing power due to rising healthcare costs. And because Social Security is a Ponzi scheme on its last legs, there will be no significant relief.
Credit: By the way, wasn’t Obamacare supposed to magically fix our “broken” healthcare system, lower premiums by an average of up to $2500 per family per year, and ensure that everyone lived happily ever after? I know — but I’m sure I heard that somewhere.
Debit: Unfortunately, Obamacare is a political illusion that made things worse — yet another failing government boondoggle plagued by increasing costs, declining enrollment, and rising loss ratios. Other than that, it’s been a wild success. Forward!
Debit: Meanwhile, a bill that extends US government borrowing authority through March 2017 was passed by Congress this week. In other words, the country is no longer broke because it just found another box of blank checks.
Credit: Yes, yes — the “official” US debt is already more than $18 trillion and greater than 100% of GDP. But all of the “really smart people” say “we owe it ourselves!” — so why worry? Right. Let the bread and circuses continue. Er, for now.
Debit: Of course, the higher debt limit will only exacerbate the greatest selloff of US debt holdings by other countries in 15 years that is going on right now. But that’s what happens when foreign nations get tired of trading real goods and services for America’s increasingly-worthless dollars.
Credit: Maybe somebody should tell our global trading partners that we owe the debt to ourselves.
Credit: But seriously, America’s continued abuse of the exorbitant privilege that comes with owning the world’s primary reserve currency is why China is demanding a new global currency. When that day comes, the bread and circuses will end, and the US will have to produce more than it consumes.
Debit: On a related note, the first Black Friday moron of the year set up a tent outside a Florida Best Buy store on October 26th so he can snatch a deal on a new television. Yes, that’s 33 days before the big sale day arrives. With that much free time, wouldn’t it be easier to just get a second job?
By the Numbers
Hey! Amaze your family at the dinner table tonight with these fun facts about Halloween:
72 Percentage of Americans who hand out Halloween candy.
46 Percentage of American adults who carve pumpkins on Halloween.
6 Number of major pumpkin producing states. (Illinois, California, Ohio, Pennsylvania, New York, Michigan.)
1810 Weight, in pounds, of the largest known pumpkin. It was grown in 2010.
500 Number of seeds in the average pumpkin.
120,000,000 Americans who dress up for Halloween.
11.5 Percentage of Americans who dress their pets up for Halloween.
90 Percentage of American parents who admit to sneaking candy from their kids’ trick-or-treat bags.
Sources: History Channel
The Question of the Week
Last Week’s Poll Results
Given a choice, which would you choose?
- A 50% chance of winning $10,000 (50%)
- $1000 guaranteed (50%)
More than 800 people responded to last week’s question and the result was an exact tie! Yes, exact— at press time, there were 428 people on each side of the debate. As many people said they would take the sure-thing as those who said they would be willing to flip a coin for the chance to win 10 times as much cash. Count me among the “bird in the hand” group — although, on a pure risk-reward basis, the math says the smarter choice in this case (by far) would be to take a chance and flip the coin.
Insider Notes: The Fed, the Free Market, and the Wisdom of Crowds
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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 one of my most popular articles, Your Big Fat Expensive Wedding: Stupid Is As Stupid Does, Ellis shared this:
There’s an old saying that politics is show business for ugly people.
True. But despite being more than qualified, I have no intention to run for office.
I’m Len Penzo and I approved this message.
Photo Credit: basepoint.co.uk