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.
Okay, off we go …
It’s a question that drives me hazy: am I or are the others crazy?
— Albert Einstein
It’s okay to be crazy, but don’t be insane.
— Sean Combs
I’m crazy, but I’m not stupid.
— Jackie Chan
Credits and Debits
Debit: Cryptocurrencies continue reaching for the stars; a single, ethereal, Bitcoin ended the week at $1562 — that’s currently 27% more valuable than an ounce of real gold and 95 times more than an ounce of physical silver. Is it just me or am I the only one who’s beginning to think the whole world has gone cuckoo for Cocoa Puffs?
Credit: Speaking of cuckoos, in the People’s Socialist Paradise of VenezuelaTM, President Nicolas Maduro proudly ordered a 60% increase in the nation’s minimum wage last week. Too bad el Presidente’s proletariat comrades are struggling with an inflation rate that’s quickly approaching 2000%. Forward!
Credit: Meanwhile, for us Norte Americanos here is the States, the value of stocks is higher now than at any time in history versus GDP. Hooray! I think.
Credit: Wait — it gets even better: The non-farm payroll increased by 211,000 jobs in April — although that number isn’t so great when you consider that it takes about 145,000 new jobs every month to merely keep up with population growth. Just keepin’ it real, homies.
Debit: By the way, the April payroll report is even more suspect when you consider that the loony “birth/death model” — that is, bureaucratic hocus pocus designed to goose employment figures — resulted in a positive adjustment of 255,000 jobs. Without that dubious manipulation, the economy actually lost 44,000 positions.
Credit: Of course, you’ve got to have a screw loose if you think that birth/death model is going away any time soon. After all, it’s been around for more than two decades — and without it, government officials wouldn’t be able to brag that US jobless claims are at a 43-year low as they were last month.
Debit: One thing is certain: Those US employment numbers better be as good as the government is reporting. That’s because a recent study by Northwestern Mutual found that 45% of Americans spend up to half their income repaying credit card debt. No, really.
Debit: With that in mind, I guess it should be no surprise that US households will soon have as much debt as they did right before the Great Financial Crisis of 2008. Uh oh.
Debit: Then again, Americans aren’t the only ones in debt up to their eyeballs — the US government is too. In fact, the US is going to expand its $20 trillion National Debt by another trillion dollars over the next five months. Yes, a trillion bucks. Yes, by September’s end.
Debit: Hey … Get used to it — the dollar Ponzi scheme won’t survive unless the National Debt hits $40 trillion over the next ten years. Er, assuming public confidence in the greenback can actually hold out that long. (Psst. The odds are it won’t.)
Debit: To put that gobsmacking, rapid, $1 trillion debt-increase in perspective, think about this: a trillion dollars is a thousand billion — or, if you prefer, a million million. Either way, adding that much debt in five short months is outright immoral — not to mention incredibly unfair to our children, who we’re expecting to pick up the tab.
Debit: Needless to say, there’s a very good reason why the debt is increasing faster than ever: it’s the only way our phony, broken, economy can generate growth anymore. Well … that is, assuming you can call 0.2% GDP “growth.”
Debit: Unfortunately — or fortunately, depending on your perspective — the Fed has no way out of the mess it finds itself in. Oh, sure; they can raise interest rates when the inevitable run on the dollar occurs — but if rates climb above 3.5%, massive defaults would probably follow. And at 5%, servicing the National Debt would cost $1 trillion — that’s more than one-third of current US tax revenue.
Credit: Those who said Soviet communism wouldn’t work because it couldn’t work were disparaged until the USSR finally imploded. America isn’t any different; ultimately, any economic system anchored by fraud is doomed to fail. The only question is “when?” — which is why economic collapses always come as a surprise, even to those who know they’re coming.
Insider Notes: Why the Dollars In Your Wallet Aren’t Money – They’re Debt
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By the Numbers
China’s first large jetliner took its maiden flight on Friday. The successful first flight is a big deal for China, and a signal that Boeing and Airbus will soon have a key competitor in an aviation market that they currently dominate:
487,000,000 The number of domestic and international journeys made last year in China.
168 Seats on the new Chinese commercial airliner, known as the C919. The plane will compete with Boeing’s 737 and Airbus’ A320.
5100 New airplanes similar in size to the C919 that China will need over the next two decades.
$1,000,000,000,000 Estimated cost for China to buy those 5100 planes from a foreign supplier.
55 Number of Chinese airlines in operation.
8 Nations that have developed large airliners. (US, Russia, Brazil, Canada, UK, France, Germany and China)
The Question of the Week
Last Week’s Poll Results
Which of these estate-planning options do you have?
- Will (36%)
- Both a will and a living trust (31%)
- Neither (30%)
- Living Trust (3%)
More than 1300 Len Penzo dot Com readers responded to last week’s question and I am glad to see that seven out of ten have taken the time to establish a will, or a will and a living trust for estate planning purposes. The Honeybee and I protected our estate with with both a will and living trust soon after our kids were born. And now that they’re on the verge of leaving the nest, it’s time to update both documents. Remember, it’s a good idea to review and update your estate planning documents every five to ten years because over time, circumstances change that may affect your original will and living trust.
Other Useless News
Programming note: Unlike most blogs, I’m always open for the weekend here at Len Penzo dot Com. There’s a fresh new article waiting for you every Saturday afternoon. At least there should be. If not, somebody call 9-1-1.
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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, Shaun dropped the following question in my inbox:
Hey, Leo! [sic] I’m thinking of starting a blog. Got any tips?
Yes, occasionally. Thanks for asking!
I’m Len Penzo and I approved this message.
Photo Credits: (coffee) brendan-c; (debt) Michael Ramirez