Black Coffee: Truth or Consequences

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.

And away we go …

“The masses have never thirsted after truth. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim.”

— Gustave Le Bon

Credits and Debits

Credit: I know there’s been plenty of stories and videos out there chronicling the growing number of tent cities popping up in many American urban areas, but that’s clearly fake news because on Friday the Bureau of Labor Statistics announced that the US unemployment rate is now just 3.8% — or as Bloomberg describes it, “about as low as it can go.”

Debit: Then again, if unemployment really is “about as low as it can go,” Rudy Havenstein — yes that Rudy Havenstein; apparently, the late central banker who presided over the Reichsbank during the Weimar hyperinflation event of 1921-1923 found a way to tweet from the grave — wants to know why there are fewer people between the ages of 25 and 54 working now than during the Great Financial Crisis:

If employment in the U.S. is so great now, why is the age 25-54 labor force participation rate lower now than May 2009, in the depths of Great Depression 2? https://t.co/PZrvU7GMLu pic.twitter.com/NXmib2OEu5

Rudolf E. Havenstein (@RudyHavenstein) June 1, 2018

Debit: Of course, being employed has its drawbacks. If you don’t believe me, then just ask Mike Meru, a 37-year-old orthodontist who owes $1 million in student loans. But wait … it gets worse: Dr. Meru currently pays only $1590 a month on the loan, which isn’t enough to cover the interest so, despite the payments, his debt balance is increasing $130 per day. If this continues, in 20 years his loan balance will be … $2 million.

Debit: If you think about it, the real crime here is virtually every last cent of the original $1 million loan that Dr. Meru is now paying interest on was created out of thin air by a banker who did nothing more strenuous than type a few keystrokes onto a computer keyboard. Even so, the debtors are always obligated to pay up — or face the inevitable consequences:

Credit: If Dave Kranzler is correct, the bankers’ days may be numbered — well, at least the current crop, anyway. That’s because Kranzler believes there are more than a few signs out there that suggest the wheels are coming off the dollar-based international monetary system. Unfortunately, the unemployment rate is so low it looks like the odds of finding somebody to put the wheels back on is going to be a challenge. At least for now.

Credit: One thing is certain: An increasing number of nations are threatening to abandon the US dollar, imperiling its role as the world’s premier reserve currency. For example, this week Russia’s first deputy prime minister, Anton Siluanov, warned that they may switch from the US dollar to the euro in future settlements, if the US continues to impose financial sanctions on his country. Never mind that the euro is a hot mess too.

Credit: Meanwhile, Turkey finished repatriating the last of its gold from the US this week. In fact, the Turkish president has suddenly turned sour against the greenback, criticizing US dollar loans and stating that international loans should be based in terms of gold instead. Sounds good to me. Not too long ago, a statement like that from an American ally would have been unthinkable. Now it’s almost commonplace.

Debit: Perhaps all of this anti-dollar sentiment is why US Treasuries are having the worst start to any year since the Great Depression … Ah, who am I kidding? There’s no “perhaps” about it.

Debit: By the way, with US Treasuries having such a terrible year, it’s no coincidence that mortgage rates are now rising at their fastest pace in almost 50 years. If rates keep rising at that pace, what do you think will happen to the housing market?

Debit: Instead of allowing the Great Financial Crisis to properly resolve itself in 2008 via a couple years of pain, the world’s central banks deferred the consequences with an unprecedented ten-year debt party. But as Chris Martenson notes, the inevitable day of reckoning is coming — and when it finally does arrive, “The pain of the 2008 crash will seem like a mere flesh wound compared to the devastation the next deflationary wave will wreak.” Uh oh.

Debit: There’s little doubt that the next financial crisis will be bigger than the last one in 2008. Perhaps more frightening, however, is that if the social fabric begins tearing at the seams, the powers-that-be may ask the public to relinquish what’s left of the rights they didn’t already foolishly give up after 9/11. Here’s hoping America knows better this time around.

The Question of the Week

[poll id="217"]

Last Week’s Poll Results

Are you planning any leisure travel this summer?

• No (44%)
• Yes, domestic. (42%)
• Yes, foreign and domestic. (10%)
• Yes, foreign. (5%)

More than 1200 Len Penzo dot Com readers responded to last week’s question and it turns out that a slight majority of them are planning some leisure travel this summer — and of those people who are traveling, about 1 in 4 will be traveling away from their home country. The Honeybee and I will be taking our annual sojourn to Hawaii later this summer. And, no, I don’t expect any volcanoes to ruin our trip.

This week’s question was submitted by Sara King. If you have a question you’d like to see featured here, please send it to to me at: Len@LenPenzo.com — and please put “Question of the Week” in the subject line.

By the Numbers

I don’t know about you, but it’s hard for me to believe that 16 years have passed since these top 10 movies (US domestic gross) of 2002 originally debuted:

1. Spider-Man ($403 million)

2. The Lord of the Rings: The Two Towers ($340 million)

3. Star Wars: Episode II – Attack of the Clones ($311 million)

4. Harry Potter and the Chamber of Secrets ($262 million)

5. My Big Fat Greek Wedding ($241 million)

6. Signs ($228 million)

7. Austin Powers in Goldmember ($213 million)

8. Men in Black II ($190 million)

9. Ice Age ($176 million)

10. Chicago ($171 million)

Source: The Movie Times

Useless News: Discretionary Spending

Imagine that you had won the following prize in a contest:

Each morning your bank would deposit $86,400 in your private account for your use. However, this prize has several rules:

1. Everything that you didn’t spend during each day would be taken away from you.

2. You may not simply transfer money into some other account.

3. You may only spend it.

4. Each morning upon awakening, the bank opens your account with another $86,400 for that day.

5. The bank can end the game without warning; at any time, it can say, “Game Over!” It can close the account, and you will not receive a new one.

What would you personally do?

You would buy anything and everything you wanted right? Not only for yourself, but for all the people you love and care for. Even for people you don’t know, because you couldn’t possibly spend it all on yourself — right?

You would try to spend every penny, and use it all, because you knew it would be replenished in the morning, right?

Actually … each of us are already a winner of this of this prize. It’s true! We just can’t seem to see it.

The prize is time:

1. Each morning we awaken to receive 86,400 seconds as a gift of life.

2. And when we go to sleep at night, any remaining time is not credited to us.

3. What we haven’t used up that day is forever lost.

4. Yesterday is forever gone.

5. Each morning the account is refilled, but the bank can dissolve your account at any time without warning …

So, what will you do with your 86,400 seconds?

Those seconds are worth so much more than the same amount in dollars. Think about it and remember to enjoy every second of your life, because time races by so much quicker than you think.

So take care of yourself, be happy, love deeply and enjoy life!

Here’s wishing you a wonderful and beautiful day.

Start spending….

(h/t: billhilly)

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 I heard from Misha, who thinks my negative attitude toward the US dollar is uncalled for:

“You’re like those chicks who sit around, criticizing another woman walking across the street and minding her own business, just because she is better dressed, more polished, and looks more confident than you feel.”

Well now … I guess it’s safe to say you’ve seen my picture.

I’m Len Penzo and I approved this message.

Photo Credit: brendan-c