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.
Let’s get right to it, shall we?
“In all our quest of greatness, like wanton boys, whose pastime is their care, we follow after bubbles, blown in the air.”
— John Webster
“I would as soon leave my son a curse as the almighty dollar.”
— Andrew Carnegie
Credits and Debits
Debit: As if the spate of new house-flipping shows on HGTV isn’t a big enough sign that we’re in the middle of a housing bubble, here’s another: reports of a 13-year-old buying his own home. Uh huh. For $552,000, no less. I strongly suspect he didn’t actually use his own money — but the story itself is a sure sign another home-buying mania is upon us. (click to enlarge)
Credit: Speaking of bubbles, I see the S&P 500 hit another all-time high on Tuesday. Hey … why not? It doesn’t really seem to matter whether the economic news is good or bad — with few exceptions, stocks only travel in one direction anymore: up. Thanks, Fed!
Debit: In fact, today’s stock market is so unhinged from reality that Facebook has become the world’s largest publisher, Netflix is worth twice as much as CBS, and Tesla’s value is supposedly on par with General Motors. No, really.
Credit: On Thursday, Amazon’s soaring stock price vaulted CEO Jeff Bezos over Bill Gates to become the world’s richest man. The feat didn’t last long, however — before the day was over, Amazon’s stock price retreated, dropping Bezos back to number two. Heh. Loser.
Debit: Sadly, Mr. Bezos’ climb to the top of the world’s-richest list is more a testament to the central banks’ easy-money policies than his business acumen. Behold:
Credit: By the way, Bezos’ wealth accumulation isn’t the only sign of the Fed’s easy-money policy. As David Stockman points out, “The Fed and its crew of traveling central banks around the world have gutted honest price discovery entirely, turning global financial markets into outright gambling dens of unchecked speculation.” Well … yeah.
Debit: That’s not all Stockman had to say about the Fed; he also noted that, “The combined $15 trillion of central bank balance sheet expansion since 2007 amounts to monetary fraud of epic proportions.” Frankly, it’s hard to disagree with him; take another look at the chart above.
Credit: It’s too bad those trillions of dollars conjured out of thin air by the Fed haven’t found their way to Main St. — instead, almost all of it continues to be fed to Wall St. and the crony capitalists in Washington DC. If you’re looking for the primary reason why the wealth gap between the rich and poor is larger than ever, you can start right there.
Debit: Meanwhile, the US economy is doomed to secular stagnation and never-ending recession as long as real income for all segments continues to stagnate or decline. The trouble is, that won’t change until our dying dollar-based international monetary system re-anchors itself to gold. Or implodes beforehand.
Credit: The Fed also pushes the mantra that a low level of inflation is a good thing. It’s not. Consider this: even an annual inflation rate of 2% will halve a currency’s purchasing power in just 34 years. Now you know why it’s so difficult to save enough for retirement. It also illustrates why you should think about keeping at least a portion of your long-term savings in the ultimate store of wealth: gold and silver.
Debit: Since 99 out of every 100 Americans save only constantly-depreciating US dollars, maybe it’s a good thing that 37% of California households have no savings. Okay … maybe not. But it’s probably why so many clueless Californians continue to be hoodwinked by statist politicians who offer to take care of their every need — with earnings from the state’s dwindling producers, of course.
Credit: In another socialist bastion, Venezuela’s currency meltdown is getting worse. This week, the black-market rate for the bolivar fell to 8700 per dollar; it was 1000 last year. Five years ago, it was just nine bolivars to the dollar. I know it’s hard to believe, but the same fate awaits the US dollar. After all, every fiat currency eventually returns to its intrinsic value: zero. The math proves it — and history confirms it.
Debit: Unfortunately, thanks to the reckless monetary policies of the Fed and the world’s other colluding central banks, the dollar’s demise is happening in plain sight — but 99.9% of the American public remain blissfuly unaware. Sadly, most will remain that way until it is too late.
By the Numbers
Here’s a refreshing change: Foxconn is bringing a $10 billion electronics plant to Wisconsin as the company takes its first step into America. Here’s a closer look at the deal:
11 Number of football fields that will fit within the plant’s 20 million square feet.
2020 Year the Foxconn plant will become operational.
3000 Number of workers who will be employed initially.
13,000 Workers expected to be eventually employed at the plant.
$53,000 Average salary that the workers will be paid.
$700,000,000 Expected annual payroll once the plant is fully staffed.
$7,000,000,000 Expected annual impact to the Wisconsin economy.
Last Week’s Poll Results
Have you ever been fired for cause from a job?
- No (83%)
- Yes (17%)
More than 1100 people responded to last week’s question and, I’m happy to say, fewer than 1 in 5 Len Penzo dot Com readers have been fired for cause by an employer. That’s actually somewhat higher than both reader Oscar and myself expected. After doing a Google search, our suspicions seen to be well-founded — according to a 2014 BLS study, the total employee discharge rate was 1.4% — and that included layoffs and dismissals for cause. I am certain the vast majority of those discharges were layoff-related.
The Question of the Week
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 why Coke Rewards are for suckers, Mike left this comment:
When I had 4000 points I tried to make a deal: I would relinquish all 4000 points for two Coke Zero 400 tickets at Daytona. Well, I never got a reply back. Maybe they didn’t want to answer me, but at a buck a Coke that’s $4000! Figure that out you all! Makes no sense!
Actually, Mike, it makes lots of sense.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-