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.
And away we go …
Credits and Debits
Debit: There are more signs that the 30-year bond bubble is finally coming to an end, as global bonds lost $1.7 trillion last month; that’t the worst monthly meltdown on record.
Debit: Of course, that’s terrible news for government pension funds because they hold oodles of those bonds. You can bet Dallas mayor — and former Pizza Hut CEO — Michael Rawlings, knows that. He’s now warning that the police and fireman’s pension is pushing his city “toward the fan blades of municipal bankruptcy.” Somebody better call 9-1-1.
Debit: Bonds aren’t the only asset class that’s in a bubble. The housing market is too. Unfortunately, falling bond prices ultimately lead to higher mortgage interest rates — which is really bad news considering that, all things considered, US homes have never been more expensive to buyers who need a mortgage.
Debit: The US government uses the cash from those bonds to help fund itself. After all, the National Debt is now $20 trillion — in part because of “worthy” federal projects like the recent $2 million study by the National Institute of Health to learn why kids don’t like to eat food that has been sneezed on. I know.
Credit: Frankly, if you’re looking for a scape goat for the asset bubbles, rising living expenses, stagnant wages, and everything else that’s wrong with our economy, blame the Federal Reserve Bank that enables the government’s profligate spending with their poisonous free-money policies and our fraudulent debt-based monetary system. The Fed has got to go.
Credit: As financial analyst Bill Bonner notes: “Increasing the money supply doesn’t increase wealth or GDP; it only changes the relation of available goods and services to available money. Eventually, the falcon of asset prices becomes deaf to the falconer of the real economy. Then he gets lost and flies into a tree. Asset prices fall to the ground. Investors panic.” Well … that’s one way to put it.
Credit: Then, when things get really bad, confidence disappears, your currency crumbles, and the lines form at ATMs. For a contemporary example, look no further than the People’s Socialist Paradise of VenezuelaTM, where last week their bolivar fell 15% — in a single day. In fact, charts like this are why Venezuelans regret that they didn’t keep at least a portion of their savings in precious metals:
Credit: In an ideal, honest money system using gold (and silver), it’s impossible to lend money you don’t have and prices remain roughly stable. Even better, you don’t have to worry about a central bank increasing the money supply faster than new goods and services enter the economy, thereby silently robbing you of your wealth.
Debit: Maybe that’s why earlier this week President-elect Trump interviewed John Allison for the position of Treasury secretary; Allison is an ex bank CEO who wants to abolish the Fed and return to the gold standard. Unfortunately, he didn’t get the job.
Debit: On a related note, a man walking down a busy New York City street took advantage of two inattentive armored truck guards by walking off with a bucket containing 86 pounds of gold. No, really. For those of you counting at home, that’s 1254 troy ounces worth $1.6 million.
Credit: If he’s ever caught, the man will be charged with grand theft. Then again, the real crime is how 86 pounds of the yellow metal currently only fetches $1.6 million in a world that’s buried under more than $200 trillion of debt.
Credit: By the way, thanks to Venezuela’s hyperinflation, 86-pounds of their 100-bolivar notes — more than 39,000 bills in all — is currently worth a measly $1950 on the black market. And within the next several weeks it’ll be only half that amount. Forward!
By the Numbers
Here are a few more nauseating examples of government waste, courtesy of Senator Jim Lankford (R-Oklahoma):
$500,000 For a study to find the connection between religion, politics and cemeteries in 12th century Iceland.
$200,000 To study 500-year old fish bones in a Tanzanian city to identify a connection between food and social status.
$1,000,000 On a campaign to tell mothers that they should prevent their teenage daughters from tanning.
$495,000 For a temporary exhibit that shared the best of medieval smells.
$3,000,000 For a 12-episode soap opera to promote the prevention of HIV/AIDS.
$412,000 On a paper arguing that glaciers are best-studied using feminist theories.
Source: Zero Hedge
Insider Notes: An Economic Implosion Scenario
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Last Week’s Poll Results
Did you do any shopping on Black Friday this year?
- No (75%)
- Yes, but only online (16%)
- Yes (9%)
More than 1200 Len Penzo dot Com readers responded to last week’s question and it turns out that, even though Black Friday was the biggest consumer spending soiree of the year, just 1 in 4 did any shopping at all that day — online or otherwise. Count me among the group that didn’t shop at all on Black Friday.
The Question of the Week
Other Useless News
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