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.
Happy Easter everyone! Off we go …
Credits and Debits
Debit: While you’re waiting for that $2500 reduction in your annual healthcare premiums promised by Obamacare advocates from sea to shining sea — heh — chew on this: when it comes to rising insurance premiums outpacing wage increases, things have never been worse. Only now, you may not get to keep your doctor. Forward!
Debit: Medical costs are so out of whack that healthcare expenses were the single biggest source of incremental spending in the US last year by nearly a factor of two. In fact, ZeroHedge estimates that healthcare spending will surpass housing as Americans’ biggest cash outlay before the end of the year. Barf bag, anyone?
Debit: In other news, Peter Schiff noted this week that the inventory-to-sales ratio is 1.4; the last time it was that high was May 2009, when the US was in the teeth of the Great Recession. Curiously, the ratio has never been that high with the economy not in recession. Translation: the next downturn is going to be epic.
Credit: Unfortunately, even ex-Fed Chairman Ben Bernanke now admits that the Fed is running out of monetary policy bullets to counteract the next economic contraction. Then again, I’m certain that will eventually end up being a blessing in disguise.
Credit: What Mr. Bernanke will never admit, is that the dollar-based international monetary system is on its death bed. That’s why interest rates will never return to normal — and it’s also why things can never begin to get better until the fiat-based system finally kicks the bucket.
Debit: And while monetary policy may be severely limited from here on out, the Central Banks will continue overplaying the manipulation card. Did you just scoff? Did you? Well … open your eyes. As Gary Savage notes, “market intervention is now a fact of life in modern markets.” Yes. And when that fails, the only parlor trick left is hyperdrive currency-printing.
Credit: By the way, blatant unabashed market manipulation helps explains financial analyst Dave Kranzler’s frustration this week when he remarked that the “stranger-than-fiction system is on full retard.” Yep. Somebody forgot to tell the Fed that you should never go full retard. Too late now.
Credit: Meanwhile, the rapidly-failing fiat system has Hugo Salinas Price saying it’s 1790 all over again. Why? Because just as “the conceit of the National Assembly in France in 1790 led to total economic prostration in the course of seven years, (so will) today’s conceited Central Bankers. But don’t expect any of them to say ‘We were mistaken.'” Oh, I don’t, Hugo. I don’t.
Credit: How close are we? Nobody knows for sure, but signs suggest that the system is reaching its limit. Rapidly shrinking debt-market liquidity — most recently experienced by Credit Suisse — is a prime example. And it’s only getting worse. As financial analyst Bill Holter notes, when the ‘exit door’ is shrinking, how do you sell if no one is willing to buy?
Credit: Most people think that the Financial Crisis of 2008 was fixed by the world’s Central Banks eight years ago — but all they did was “solve” a debt problem with … more debt. It’s a trick that probably won’t work again. And it’s why the next crisis may be the final crisis. At least for the current debt-based fiat-currency Ponzi scheme masquerading as a sound monetary system.
Debit: That’s bad news for those who refuse to protect themselves with precious metals. On the other hand, and somewhat perversely, it’ll be no skin off the backs of one in three people who have never saved a dime for their retirement. Or anything else for that matter.
Debit: Apparently some folks really can go full retard and get away with it.
By the Numbers
While you’re hiding Easter eggs tonight, amaze your friends with these quick facts on the holy holiday:
22 The earliest day in March that Easter can fall.
25 The latest day in April that Easter can arrive.
25 Average number of hours it takes a hen to lay a single egg.
0 In ancient times, the number of eggs that Christians were allowed to eat during Lent.
501,000 Number of eggs used for the world’s largest-ever Easter egg hunt in Winter Haven, Florida.
4 Percentage of people who eat chocolate Easter bunnies from the tail first. (I know.)
Source: History
Last Week’s Poll Results
What do you enjoy more?
- Saving (72%)
- Spending (18%)
- I’m not sure (10%)
More than 1200 people responded to last week’s question. Based on the survey results, I’m happy to report that a strong majority of Len Penzo dot Com readers — more than 7 in 10 — prefer saving over spending. Why am I not surprised? 🙂
The Question of the Week
[poll id="106"]
Other Useless News
Here are the top 5 articles viewed by my 8978 RSS feed and weekly email subscribers over the past 30 days (excluding Black Coffee posts):
- 9 Crazy Tax Deductions That the IRS Eventually Accepted
- 5 Things Nobody Tells You About Being Poor — and for Good Reason
- 36 Amazing Uses for the Lowly Plastic Grocery Bag
- The 5 Most Misleading Grocery Items Shoppers Waste Money On
- 6 Mistakes People Make When Trying to Repair Their Credit
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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
This week Janice passed along some well wishes:
Len, I just wanted to say I love your blog! I hope you have a very happy Easter!
Thank you, Janice. And I hope your holiday is, um, eggcellent too!
I’m Len Penzo and I approved this message.
Photo Credit: Teresa Whitaker
Len, you question this week really caught me off guard. My parents were good financial role models simply because my dad didn’t make much money as a machinist, and they had to watch every penny they had. But my parents did not live off credit. They would save over time for big ticket items. They also had an emergency fund. My dad encouraged me to save by matching what I saved – so I had to decide on my own how much to save and how much to spend when l received or earned money. My siblings and I each had are own savings accounts and savings books. As adults we are all good stewards with our finances, generous givers, and enjoying life without financial fear because of my parents example. BTW at the time my parents would have been considered “working poor ” but we never felt that way!
Thanks for sharing that, Rick!
I am afraid that saving has become a “lost art.” There was a time when all but the most irresponsible people understood that saving money was essential to not just staying financially secure, but also survival — especially in retirement. Those days are long gone.
Over the years, the banking industry and government have teamed up to devise a dangerous cocktail for its citizens based upon easy credit and generous state and federal benefits; as a result of those “safety nets,” the majority of the populace has become financially complacent.
What they don’t understand is that when the dollar dies, that easy-credit and those generous benefits will be sharply curtailed. The good news is that will force most folks to once again understand the importance of saving.
Len,
I watched a debate between Peter Schiff and Harry Dent yesterday and it blows my mind how Mr. Dent thinks the place of safety in the next crisis is the Dollar?! The Dollar is the primary reason the world is in this mess! Do you think he has an agenda or is he just lost? Meanwhile the metals took another big hit Wednesday, which shows the Bankers are still in control. That alone should show Mr. Dent where all wealth will run to when this crap show begins.
Still waiting anxiously,
Jared
Harry Dent is knowledgable in macroeconomics, but he seems to have trouble applying what he knows to the real world, Jared.
He has a particularly big blind spot when it comes to currencies; he seems unable to grasp the fact that, since fiat currencies are backed only by blind faith, they are 100% dependent on confidence. Either that or he foolishly believes public confidence in the US dollar will never be broken — even though it’s clearly waning. Either way, he is badly mistaken.
I agree that there will be an initial flight to the dollar during the opening stage of the next debt crisis — as it has with every world crisis before it over the past 80 years or so — but I believe this time it will be fleeting. At some point during the next financial maelstrom, the world will wake up and realize that the amount of fiat that has been printed far exceeds the wealth that has actually been created.
At that moment, the stampede will start as everyone tries to convert the sham funny money (including US dollars) in their wallets, retirement funds and savings accounts into precious metals, real estate and other real assets. Of course, they will fail … because at that point there will be nobody but the stupidest among us willing to exchange worthless currency for anything of real value.
I’m glad you enjoyed them, James. 🙂
My parents were very frugal, so good role models in that respect, but they have a “scarcity” mind set. Even in retirement they are doing really good financially, but refusing to spend. Very frustrating for us kids, who want them to enjoy these years. People that grew up in the shadows of the Great Depression and the World Wars were really affected.