It’s time to sit back, relax and enjoy a little joe …
It’s Super Bowl weekend! Just for the record, I’m one of those people who enjoy watching the commercials more than the game.
And away we go …
Credits and Debits
Debit: Check out what $2.4 million will get you in Vancouver, British Columbia these days. Nope … there’s no housing bubble in Canada, eh:
Debit: Then again, it’s probably a good thing that house is for sale in Canada because it looks like US layoffs are on the rise. In fact, they’re now at the highest level in six months — and 42% higher than the same time last year.
Debit: There is a growing, unsettling din among those who make their living in the financial world. Just this week, the Financial Times warned of “financial catastrophe” while a strategist for Citi opined that the world economy “appears to be trapped in a death spiral.” Uh huh. Try putting a silver lining around that.
Debit: A large majority of “financial experts” regularly scoff and mock those who point out and cogently explain why the international monetary system is on its death bed. Does anybody else wonder why some of those same experts are now openly sounding similar alarm bells — and with increasing frequency?
Credit: After all, I don’t remember ever hearing similar dire pronouncements from the financial industry during past recessions — except by the “tin foil hat” crowd, of course. Hey … Why are you looking at me?
Debit: Proponents of fiat money — the mother’s milk of Big Government — are desperate to keep the current Ponzi-based gravy train going. No matter the cost. This week Germany’s Social Democrat party proposed a ban on all cash transactions above $5500. And Bloomberg went a step further, calling for the end of cash. Period.
Debit: Meanwhile, the current system is clearly collapsing and the world’s central banks are resorting to increasingly desperate measures to stave off the inevitable, including the folly of negative interest rates, as the Bank of Japan recently did.
Credit: But as Bill Holter notes, “a real and functioning (financial) system cannot exist with negative rates.” At least not for long.
Credit: I suspect the Bank of Japan found this out the hard way after they had to cancel a 10-year bond offering for the first time ever because of a lack of demand due to their negative interest rate policy (NIRP). Imagine that.
Credit: Or, as financial analyst Andy Hoffman observed: “In other words, the nation with the world’s highest debt/GDP ratio can (no longer) service its debts because its central bank didn’t realize no one will buy bonds guaranteed to lose money, in a currency it is purposely destroying.” Well … yeah.
Credit: Just how crazy is NIRP? Franklin Sanders reminds us that: “Negative rates mean that you have to PAY to hold cash or government bonds, while holding silver or gold costs nothing. Think long and hard on that. Long and hard.” Go ahead, readers. I’ll wait.
Debit: Despite existing evidence that proves negative interest rates turn economic laws on their head — and assault common sense too — the Fed asked US banks this week to consider the possibilities if they implement NIRP. I know. And you think the financial world is crazy now? Just you wait …
By the Numbers
This year’s big game between the Denver Broncos and Carolina Panthers marks the golden anniversary of the NFL Super Bowl:
2.4 Points per possession averaged by Carolina this season — that was tops in in the NFL this year.
1.38 Points per possession given up by Denver — that was the best defensive figure in the NFL in 2015.
6.7 Weight, in pounds, of the Vince Lombardi trophy that is awarded to the Super Bowl winner.
8 Super Bowl appearances by Denver. That ties Pittsburgh, Dallas and New England for most appearances in the big game.
67 Percentage of teams that won the Super Bowl after scoring first.
$4,200,000,000 According to the American Gaming Association, the amount of money that will be bet on the Super Bowl this year.
97 Percentage of Super Bowl bets that will be made illegally this year.
Source: AL.com
Insider Announcement: Get Ready for an Insider Conference Call!
This month, Len Penzo dot Com Insiders will have access to my Annual State of the Household report that updates my current net worth and breaks down my total household expenses for 2015.
Also, as a little experiment, I’m going to offer a 30-minute conference call on Saturday, February 27th. The intent is to have an open forum where we can discuss personal finance, the world economy and macroeconomics — or anything else you’d like! To be honest, I have no idea if there is an appetite for this, but I think it will be a lot of fun and, if the call is well-received by those in attendance, I promise to make it a quarterly or bimonthly event — no matter how many people show up!
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Insider Notes: Why Interest Rates Will Only Go Lower Under the Current System
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Last Week’s Poll Results
Would you accept $2 million to leave your country and never return?
- No (59%)
- Yes (41%)
More than 800 Len Penzo dot Com readers responded to last week’s question and slightly more than 2 in 5 would leave their country and never return in exchange for $2 million. I’m a bit surprised at that number — I figured it would be lower than that. I know I wouldn’t do it.
The Question of the Week
[poll id="99"]
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 giving 41 reasons why I won’t loan money to friends — including my refusal to loan money to anyone who owns the latest iPhone — Super Dweeb had this to say:
An iPhone isnt a luxury item in this day and age. Its an investment.
You’re confused. Apple stock is an investment — not the latest iPhone.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
Len, this morning’s column is depressing and sadly, accurate. Yet the folks running the country are touting ‘low’ unemployment and that “we’ve recovered from the worst economic crisis in generations”. SURELY mainstream America is beginning to suspect that something’s amiss, right?
Lauren: I think 97% of all Americans have no clue what is coming. And I think another 2% have heard the warnings and agree something is amiss, but are in complete denial — either because the truth makes them uncomfortable, or because they are simply unable to shake off their normalcy bias regarding the current monetary system.
Lauren ,
Unfortunately the majority are sheep, which will be led to slaughter! Only those who are awake and follow the Constitution and Biblical principles of economics (i.e. Gold and Silver) will be able to come out ahead after the reset. There was a reason the Founders put into our Constitution that our monetary system should only be based on gold and silver coinage. They had first hand experience with fiat money, which was called the Continental. It hyper inflated and caused severe problems for the colonies. Now all fiat around the world will eventually do the same.
That is a good and surprising result. In real life, I wouldn’t accept the $2 million because our country is really a good place especially for retirement. But, if it is just like for 20 to 30 years, I’d accept it. Nice question for the week Len.
This is insane in Vancouver! I thought San Francisco area(where I am living at) is crazy enough but apparently SF is very affordable compared to Vancouver.
I always wonder when I’ll be able to afford a home here, and if/when I can afford it someday, would I really want to put all my money for a house? What if it all collapse? Luckily I’m so far pretty happy with my rented small apartment.
Don;t be fooled, Charlie: San Francisco is just as bad as Vancouver … if not worse.
http://lenpenzo.com/blog/id33886-black-coffee-10-october-2015.html
The concept of cashless society isn’t horrible… I mean, at least it’s convenient. Especially, if you forget your wallet as much as I do!
While I understand the arguments against the cashless society, it seems to me the bigger problem, as you eloquently point out week after week, is the underlying currency. If the dollar is worth zilch and has no credibility, then it doesn’t matter if you use cash, credit cards, own homes or stocks, it’s all WORTHLESS, right?!
Using that argument, the only thing of value are “practical” things, food/shelter/guns/water/gas/pokemon cards… even gold and silver lose a little something since you wouldn’t want to trade them for currency. The hard part for me to wrap my mind around is trading a gold coin (that may have cost hundreds or thousands in the current economy) for a bag of groceries or tank of gas in some future economy…
Brian: For me, the biggest problem with a ban on cash — aside from the loss of privacy and giving the government complete control over everyone’s personal wealth (what a terrifying thought!) — is it saves banks from having any responsibility to their depositors because it removes the threat of bank runs. In other words, they no longer have any reason to be accountable (as if they are accountable now).
As for your comment about everything being worthless … No, it’s not all worthless if the dollar has zero credibility or value because gold and silver are — and will always be — money.
Don’t let normalcy bias cloud your thinking. Until 1933, the US had gold coins floating throughout the nation’s money supply. People spent them as they would any other coin. Prior to 1965, all of our dimes, quarters, half-dollars and dollar coins were made of silver and spent just like the same coins we use today that lack any precious metals.
Where are all of those coins today? Well … it’s Gresham’s Law in action: When the dollar became unanchored to gold in 1971, Americans took all of that good money (those gold and silver coins) and put it into hiding.
Only when the worthless fiat dollar finally disappears for good — or is once again backed by precious metals — will the good money finally return in everyday exchanges.
Len,
Concerning the negativity, realism is often seen as pessimism by the uninitiated. I have foughtt this perception for some time.
When things truly go down the tube, I will do my best to refrain from saying “I told you so.” I will most likely quote Sheldon Cooper and say “I inforrmed you thusly.”
I will try to refrain from saying “I told you so” too, David. Until then, we will both have to be content to take those rubber arrows being slung our way by “financial experts” who know so much that really isn’t true.
I read an article in Money Magazine , I think, that said that since 1902 gold has only risen 1% in value when adjusted for inflation and the only thing that has done worse is cash. Your thoughts on this Len?
I’ll give it a shot, Joe. Thanks for asking.
First off, anybody can cherry pick dates comparing performance of various stocks, commodities and bonds, to fit their narrative. I can do that too! For example, since the turn of the 21st century, gold has out-performed the stock market, despite the recent three-year consolidation.
Besides, the 113-year timeline (1902 – 2016) is pointless, IMO. Nobody I know of has an investment timeline that long, and besides … there a lots of ups and downs over a long period. The important point is knowing when is the right time to move into a particular asset class. All things considered, I think my 15-year contemporary timeline makes more sense, don’t you?
But, when it comes to precious metals, comparing asset class performance over arbitrary time periods misses the point anyway.
Gold and silver are insurance against currency failure, first and foremost. And when currencies are relatively healthy, gold and silver still serve a valuable purpose, helping to diversify portfolios by acting as a rock-solid store of wealth that maintains purchasing power over long time periods, through both inflation and deflation.
In 1902, it took $20.67 to buy a troy ounce of gold. Today, it takes $1200 to buy the same ounce of gold. Even using the government’s badly manipulated CPI figures, $1200 today would buy $43.45 worth of goods in 1902, so clearly gold has more than doubled its purchasing power since then — as it should given technological advancements that increase productivity and efficiency. And as you can see, that’s far more than 1% after adjusting for inflation.