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.
Another glorious week comes to an end. Off we go …
“When you see that trading is not done by consent, but by compulsion; when you see that in order to produce you need to obtain permission from men who produce nothing; when you see money flowing into those who deal not in goods, but in favors; when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them but protects them against you; when you see corruption being rewarded and honesty becoming a self-sacrifice — then you know your society is doomed.”
— Francisco’s “Money Speech” from Ayn Rand’s “Atlas Shrugged”
“All paper money eventually returns to its intrinsic value: zero.”
Credits and Debits
Credit: Did you see this? A recent Gallup poll found that the percentage of Americans who are actually satisfied with how things are going in the United States was just 38%! And while that may seem low, that number is actually the highest satisfaction rate in 12 years. No, really.
Credit: As Gallup notes, the national satisfaction index, which was first measured in 1979, is now back to its historical average of 37%. However, this pales in comparison to the satisfaction levels reached during the economic boom periods in the mid-1980s and late 1990s. Imagine that.
Debit: There’s a good reason why a significant majority of Americans have been in a relatively sour mood for the past two decades — and most of them don’t even know it: the “Almighty Dollar” is dying. Yes, that seems like a crazy claim — but for those who are willing to open their eyes, the supporting evidence is everywhere.
Debit: Let’s look at Exhibit A: whether it’s houses, stocks, government bonds, fine art, or collectible cars, almost everything is in a bubble. That’s because the Fed has been forced to create trillions of additional dollars — which have to go somewhere — via its so-called “quantitative easing” program in order to keep the Ponzi scheme better known as the debt-based international monetary system from collapsing.
Debit: In fact, Centricus Asset Management Fund Manager Ralph Jainz says we’re seeing the greatest asset inflation bubble in 20 years — and he’s warning that it could pop sooner than many people expect. Although I’m sure the Plunge Protection Team will probably have something to say about that.
Debit: Those who aren’t convinced that a housing bubble exists should consider Exhibit B: a two-bedroom, one-bath, 900 square-foot cottage in Palo Alto that some realtor has decided is worth $2.6 million. I know — but it comes with granite countertops and stainless steel appliances.
Credit: By the way, if you think the housing market bubble is enormous, well … check this bubble out:
Debit: Then there’s Exhibit C: With trillion-dollar budget deficits projected to be the norm in the coming years, the US government desperately needs buyers of its debt. However, foreigners are clearly losing their appetite for US debt; Russia, in particular, recently cut its Treasury holdings by 50% — in essence, reducing America’s credit limit at a time when it’s looking to increase it.
Debit: Russia’s reduction of T-bills was so dramatic that, for the first time ever, the dollar value of its gold holdings now exceeds the dollar value of their US Treasury holdings. Aside from a total lack of confidence in the future of the greenback, can anybody suggest an alternative reason why Russia is now dumping its dollar reserves in favor of the yellow metal?
Debit: Of course, the blooming trade war between the US and the rest of the world is Exhibit D. As Robert Triffin correctly predicted, the cost of having the world’s reserve currency is ever-expanding trade deficits — and by extension the continued erosion of US manufacturing jobs. Now some fear the resulting tariff tit-for-tat will lead to China’s gradual — or sudden — liquidation ofits $1.2 trillion in Treasury holdings.
Credit: Finally, behold Exhibit E: The US dollar has been a fiat currency since 1971 — and history has proven that fiat currencies always end in collapse. Period. End of story. Which is why I strongly suspect the next crisis coming down the pike will be a currency crisis of epic proportions.
Credit: As Franklin Sanders notes, “Nothing structural has been fixed since 2008, other than public relations: same rotten banks, same derivatives mess. Debt levels are (much) higher. I’m not predicting this will happen tomorrow, but the cannon is loaded, merely awaiting a match. And when the match lights, it will be too late to scramble for a safe position.” Truer words have never been spoken.
By the Numbers
This week the 2018 BP Statistical Review of World Energy was released, which covers energy data through 2017. Here are some of the highlights:
92,600,000 Barrels of oil the world produced per day last year. That’s a new record.
8 The current number of consecutive years that global oil production has increased.
1 The United States’ rank among the world’s top oil producers in 2017.
13,000,000 The average daily barrels of oil the US produced last year.
12,000,000 The average daily barrels of oil produced by the second ranked nation. (Saudi Arabia)
1 The United States’ rank among the world’s top natural gas producers last year.
51 Percentage of the world’s coal consumed by China in 2017.
35 Percentage year-over-year increase in global solar power consumption in 2017.
17 Percentage year-over-year increase in global wind power consumption in 2017.
The Question of the Week
Last Week’s Poll Results
Do you think it’s better to buy or rent a home?
- Buy (66%)
- I’m not sure. (20%)
- Rent (14%)
More than 1300 Len Penzo dot Com readers responded to last week’s question, and 2 in 3 say that, despite the crazy housing market prices present in many places, it’s still better to be a home buyer than a renter. Count me among the 14% who believe it’s better to rent — at least until the housing bubble pops.
Useless News: Salesman of the Year
A young guy from Idaho moved to Florida and went to a big “everything under one roof” department store looking for a job.
So the Manager asked, “Do you have any sales experience?”
“Yeah,” said the young man, “I was a vacuum salesman back in Idaho.”
Well, the boss was unsure, but he liked the kid and figured he’d give him a shot, so he gave him the job.
“Okay. You start tomorrow. I’ll come down after we close and see how you did.”
The young guy’s first day on the job was rough, but he got through it. After the store was locked up, the boss came down to the sales floor.
“How many customers bought something from you today?”
The kid frowned and looked at the floor and muttered, “One.”
“Just one?” said the boss. “Our sales people average sales to 20 to 30 customers a day! That will have to change, and soon, if you’d like to continue your employment here. We have very strict standards for our sales force here in Florida. One sale a day might have been acceptable in Idaho, but you’re not on the farm anymore, son.”
The kid took his beating, but continued to look at his shoes, and the boss felt bad for chewing the kid out on his first day. “So, how much was your one sale for?” the boss asked.
The kid looked up at his boss and said, “$101,237.65.”
The boss, astonished, said, “$101,237.65! What the heck did you sell?”
The kid said, “Well, first, I sold him some new fish hooks. Then I sold him a new fishing rod to go with his new hooks. Then I asked him where he was going fishing and he said down the coast, so I told him he was going to need a boat, so we went down to the boat department and I sold him a twin engine Chris-Craft. Then he said he didn’t think his Honda Civic would pull it, so I took him down to the automotive department and sold him that 4×4 Expedition.”
Astonished at what he just heard, the boss said, “You’re telling me that a guy came in here to buy a fish hook and you sold him a boat and a TRUCK!?”
“No,” the kid said, “The guy came in here to buy some tampons for his wife and I said, ‘Dude, your weekend’s shot! You should go fishing!”
(h/t: RD Blakeslee)
Other Useless News
Here are the top five articles viewed by my 20,202 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- The 7 Deadly Sins of Personal Finance
- Dear Diary: What I Did On My Summer Vacation
- Gas or Charcoal Barbecues: Which Is More Cost Effective?
- The Ethics of Found Money: How and Where Do You Draw the Line?
- How to Save for Retirement When You Don’t Make a Lot of Money
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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, Michele disagreed with my article explaining why extended warranties for new tires are a waste of money:
” I seem to have a knack for getting nails in the sidewalls of at least two tires for every set of tires I own.”
Pro tip: Sidewall failures rarely happen when the tires are installed with the tread-side down.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c