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.
Earlier this week, reader Rebecca wanted to know why I called last week’s edition of Black Coffee an espresso edition — even though it was not abnormally brief.
… I’m struggling to figure out what exactly makes your Black Coffee (articles) ‘Espresso Editions.’ If it is not the length, what is it?
Rebecca: Wow. First off, I am flattered — but dumbfounded, really — as to how anybody could enjoy this column enough to even care about something like that! But since you asked, I’ll tell you. Over the years, my rule of thumb has been to call any edition of Black Coffee with fewer than ten credits/debits an espresso edition. Last week, you’ll notice that I had 11 credits/debits — so, technically, you’re not going crazy. It was a full-strength cup of joe. So yours truly screwed up. Not that it really matters.
I will say this: When I started writing last week’s column, I fully intended the piece to be abbreviated … but I got on a bit of a roll and before I knew it, I had a full article.
Anyway, consider myself a week early because this time, I really am presenting an official espresso edition of Black Coffee.
Here we go …
Credits and Debits
Debit: I see the economic collapse in Venezuela — South America’s Socialist ParadiseTM — has reached the point where “savage suffering” now grips the populace amid widespread shortages that have resulted in a nationwide “food emergency.” Forward!
Debit: The good news is, with the nanny-state disintegrating — and the revolution crumbling faster than a one-week old Chips Ahoy! cookie — President Maduro announced a new plan for solving the massive food shortages once and for all: grow your own food at home. Viva la socialismo!
Credit: So, to sum up: After making its citizens dependent on the government for their every need — and catastrophically failing to deliver — Venezuela’s socialist “masterminds” are now asking begging the people who put them in office to become self-reliant. I know.
Debit: Of course, this is what happens when socialist governments finally run out of other peoples’ money. Don’t laugh; a similar story will befall America too — and sooner than most people think.
Debit: Don’t believe me? Negative interest rates are a sure sign that governments worldwide are having trouble getting people to bite off more debt. The trouble is, negative rates aren’t rational — and they certainly aren’t conducive to free market capitalism.
Debit: Needless to say, few people would leave their cash in a bank if they had to pay their depository to hold it — which is why the war on cash is now in full force. In fact, this past week the ECB fired off its opening salvo by voting to eliminate 500-euro notes.
Debit: And if you think it’s pure coincidence that, during the same week, the Washington Post presented an op-ed piece from Harvard statist Larry Summers who proposed banning $100 bills, well … I’ve got some lakefront property in the Sahara to sell you.
Credit: Bill Bonner had this to say about the war on cash: “Once it’s all numbers in a computer, they won’t even have to point their guns at you anymore. Then it will be possible to rub out your savings by simply pushing a button on a computer keyboard. At that juncture you’d better not be too uppity, citizen.” Who? Me?
Credit: Then again, maybe I’m being paranoid. Maybe I really don’t have to worry about one day being considered a potential cash outlaw. After all, what makes one think they’ll get rid of paper money when they can’t even let go of the penny?
By the Numbers
A brief look at the impacts of economic collapse and hyperinflation in the People’s Socialist ParadiseTM of Venezuela:
$2.27 Price of a gallon of gasoline in Venezuela once government subsidies are officially discontinued later this year.
$0.05 Subsidized price for a gallon of gasoline that Venezuelans currently pay.
20 Years since the Venezuelans last saw a price increase at the pump.
42.2% Increase in Venezuela’s food and non-alcoholic beverage prices during the final quarter of 2015.
46.6% Increase in Venezuelan restaurant prices during the final quarter of 2015.
$133 Cost in Venezuela for a large serving of McDonald’s French fries.
$755 Price of a 36-pack of condoms in Caracas
Sources: CNN; Fox News Latino; The Independent
Insider Notes: Save the Date! Conference Call Next Weekend!
My first Len Penzo do Com Insider conference call will be next Saturday, February 27th at 11:00 a.m. Pacific Time / 2:00 p.m. Eastern. This will be a half-hour open forum for Insiders. I’ll be happy to answer your questions regarding personal finance, macroeconomics, how I’m preparing for the future, blogging … or almost anything else for that matter! I said “almost.”
Frankly, I have no idea if there is even an appetite for this — but we’re going to find out. I hope to see you there!
For those who are interested, here is the call-in information:
Hey! You need to be an Insider to view this section! If you’d like to join, please click “Insider Membership” at the top of my blog page.
The Question of the Week
[poll id="101"]
Last Week’s Poll Result
How far do you live from work?
- Less than 5 miles (28%)
- 11 to 25 miles (27%)
- 5 to 10 miles (17%)
- 26 to 40 miles (12%)
- I work from home! (11%)
- More than 40 miles (5%)
Almost 1000 people answered this week’s survey question and two in five of them are fortunate enough to work from home or at least live less than 5 miles from their job site. Not bad. Not bad at all. On the other side of the spectrum are the 17% who live 26 miles or more from work; include me in that group. The good news for me at least is, I get to telecommute two to three days per week. Well … most of the time. I’m a little more grumpy on the weeks that I don’t!
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. British Columbia (1.76 pages/visit)
2. Nova Scotia (1.73)
3. Quebec (1.62)
4. Ontario (1.59)
5. Manitoba (1.52)
9. Saskatchewan (1.34)
10. New Brunswick (1.25)
11. Northwest Territories (1.20)
12. Nunavut (1.13)
13. Yukon Territory (1.00)
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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 post on the 8 Weirdest Insurance Claim Frauds of All Time, JB had a special request:
Len, send me an email. I have a great idea to make some quick cash.
Um … I think I’ll pass, JB.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
Shouldn’t Venezuela get a credit because, if thy had any food, it would surely be free. They are feeling the Bern down South.
I’m still trying to figure out if Sanders is getting votes only because people realize his opponent should be sitting in a jail cell rather than stumping on the campaign trail — or because the voters are so naive and economically illiterate that they really do buy into his Utopian nanny-state “free” stuff message. I’m hoping it’s the former, but I fear it is the latter.
I think that many college-age kids are sick of being lied to. Sanders, like many good socialists, is quite the salesman and the kids are buying. To his credit, Bernie really has a good grasp on many of the problems that are dragging the country down. His solutions are the problem.
The kids’ economic gullibility is the fault of our K-12 education system — and, truth be told, their parents too.
Macroeconomics (at least the Austrian school variety) is not being taught in high school. If it was, these kids would know dangerous charlatans like Sanders — and every other Keynesian politician who promises them something for nothing — are full of excrement.
That’s why I teach my kids this stuff at the dinner table.
Len,
I guess if they ban cash then the best thing to own would be precious metals. They (bankers) are losing control because Monday when the markets were closed they tried desperately to pull down the metals! They hit them hard with paper, but by weeks end the metals have already recovered substantially. I must say the PPT did a great job of pulling the market back up 1,000 points. Bravo, but it won’t last! Speaking of a cashless society, maybe that 2000 year old book of Revelation isn’t so crazy after all. Oh yeah, that book also predicted a major Mideast war and it’s in the beginning stages as I type!
Jared
The key to this whole thing is precious metals. The game ends when the bankers can no longer provide the physical … until then, the charade will continue. One thing is certain, when the charade ends, those who do not have precious metals will be on the outside looking in — wishing they had some.
I hate to turn this financial blog into a religious debate, but I just have to say this.
Where in Revelation does it say that 2000 years in the future there will be no cash ? I am aware of the mark on the right hand and forehead thing, but where does it say no cash? I think you are reading that into it.
When people interpret the predictions of Revelation are they aware of the first 3 verses? “The revelation from Jesus Christ, which God gave him to show his servants what must SOON TAKE PLACE. . . Blessed is the one who reads aloud the words of this prophecy, and blessed are those who hear it and take to heart what is written in it, BECAUSE THE TIME IS NEAR.”
How is waiting 2000 years for the fulfillment of this book considered “near” and “soon”?
Perhaps John was more concerned about Christians in his own day then Christians in America 2000 years away. Not everything in the world revolves around us.
I don’t think Revelation has anything to do with this either, Josh. It won’t be the end of the world; it will be a financial reset that will revalue the dollar, other fiat currencies, and their paper derivatives to their true value (zero … or close to zero) and ultimately redefine who owns the real wealth in the world.
Will it be an earth-shattering event for most people? Yes. Could there be supply chain disruptions if the powers that be wait for everything to collapse before doing something? Yes, but they will be temporary. Will Americans’ standard of living drop? Yes, for awhile, until we begin producing more than we consume again. Will people’s life savings be wiped out? Yes, for those who failed to protect themselves.
But will it be the end of the world? No. Economic resets have happened more than a few times in history. Life will go on — but America will be much different than it is today. The good news is I believe we will all be forced to return to what built this country in the first place: small-government, sound money, hard work and self-reliance.
I think I would panic when everything is electronic! I am not that used to using electronic. I still prefer cash, Len. How about you?
For me, James, they both have their benefits. But cash is an important check and balance on the banks (without it, banks would not have to fear bank runs that could put them out of business). It also — along with precious metals — maintains citizens’ independence from total government control.
Len,
Just wanted to put the Revelation adage out just for provoking thought. You would have to have a similar setup to what the book describes as the Antichrist government in order to go cashless. What’s even more spooky is that Obama is trying to erase what America use to be and hand us to the United Nations (one world government). Also it says Damascus would no longer be a city in those days and with the action surrounding it I could possibly see a nuclear strike leveling that city. Like I said, just for thought. Gold and Silver most likely would be used to barter from the people who decided not to follow the one world system. God (in the Bible) issued Gold and Silver to be the monetary system for man just our Foubders issued Gold and Silver to be the monetary system for the United States. Unfortunately people continually turn their back on the wisdom of God and the Founders of this once great nation.
Let’s just hang in there, I think something big is going to happen in the coming months!
Jared
Jared: My hope is that, after the reset, gold and silver coins will once again be used as actual currency. That will help ensure the government lives within its means, and provide the people with the financial security that comes with a system based upon sound money.
Before any of those predictions supposedly found in the book of Revelation can make sense, you have to show me how they are fulfilled “near” to John’s time, and “soon to take place” to John’s time. The intro to the book say “near” and “soon”, it all has to fall under that understanding. The UN and nuclear strikes 2000 years away from John are not near or soon to him or his readers..
Why would John write to the seven churches in Asia Minor who were being persecuted and killed by Jews and Romans to tell them about war and persecution 2000 years away? Maybe the predictions in Revelation should be fulfilled “soon” and “near” to John’s readers and actually apply to them and not us.
Just something to think about before we go applying every newspaper headline as a fulfillment of a prophecy.
Thank you for my weekly dose of why socialism seems great until you implement it, although here in the States it does look like the Fed is going to make a slight uptick on interest rates.
I haven’t seen the last two years of numbers (okay, I haven’t looked), but I think that in light of possible rising interest rates in the US, its worthwhile to ask if our debt load would be sustainable with different monetary policy.
http://www.deptofnumbers.com/misc/debt-revenue-and-expenditures-as-a-fraction-of-gdp/
Based on some back of the excel math that I’ve done, it seems like the US would not be able to service our current debt loads within 2-3 years if the Fed Raised interest rates to about 2%.
Very observant, Hannah. You are correct. If interest rates ever returned to the historical average interest rate of between 5% and 7%, it service on the debt would gobble up more than a third of current tax revenues. Something would have to give: a much smaller Federal government and sharp curtailment of all federal handouts and military spending. There is no political will there for that.
Unfortunately, even if there was political will, we passed the Rubicon several years ago. There is nothing that can be done now to stop what is coming. The math is incontrovertible: our debt-based monetary system is reaching its natural limit. The game is almost over.