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.
I hope everyone is having a great weekend! Let’s get this party started …
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
— Adam Smith
Credits and Debits
Debit: If you trust the government data, there is a severe labor shortage in the US. Yep. A new report says employers are having a rough time finding qualified employees to fill a record 6.7 million job openings, which is hard to believe considering there are 102 million Americans — almost one-third of the US population — who aren’t currently employed, voluntarily or otherwise. Hmm.
Credit: Perhaps the “tight” labor market is a primary reason why, after more than a decade, a growing number of workers are beginning to see more money in their paychecks. Or maybe it’s being necessitated by something else … like a debauched currency. Regardless, I guess it’s better late than never.
Credit: Unfortunately, wages don’t seem to be rising fast enough to outpace inflation. At least that’s true if you’re using Jack-in-the-Box tacos as an inflation benchmark. Don’t laugh; if the benchmark is good enough for Bloomberg — and, apparently, it is — then it’s good enough for me.
Debit: Heck … even the Personal Consumption Expenditures price index — which is not much better than the extremely misleading Consumer Price Index — shows inflation is now running at a 6-year high.
Debit: No matter what the actual inflation rate is, one thing is certain: Americans’ annual spending grew faster than their incomes for the 29th month in a row. As a result, the savings rate is now near an all-time low. Imagine that.
Debit: Meanwhile, the yield curve is now one rate hike away from officially inverting; the last time it was this flat was the summer of 2007. Why does this matter? Well … because 9 of the last 10 curve inversions presaged a recession, that’s why. Oh … and because the last two preceded bear markets that resulted in stocks losing half their value. But other than that, yield curve inversions are pretty mundane.
Debit: The flattening yield curve hasn’t scared investors who have pushed margin debt to an all-time high. In fact, margin debt is nearly 40% higher than the previous high reached just prior to the Great Financial Crisis (GFC) of 2008. Meh. I’m sure that’s just a coincidence too.
Debit: Then again, investor enthusiasm in the stock market belies the fact that the economy has yet to recover from the ’08 GFC, as evidenced by US industrial production, which has yet to recover from its last peak 125 months ago. Folks, that’s the longest manufacturing recovery gap in the history of the 100- year data series! In other words, it’s been a decade of this:
Debit: Industrial production has never been a problem for Germany. This week the manufacturing powerhouse’s chancellor, Angela Merkel, warned that the trade wars currently engulfing the US, China and the Eurozone would eventually lead to a global financial crisis. (Psst. Somebody should tell Ms. Merkel that unless there’s a monetary reset, a global financial crisis is coming — with or without those trade wars.)
Credit: Of course, a big reason for anemic US production output is because we’re in the midst of a 10-year economic depression; it’s just been difficult to see because it’s hidden by central bank currency printing that artificially inflates stock and real estate prices, and electronic welfare payments that make soup lines obsolete. But, try as they might, what they can’t hide is societal decay like this:
Debit: The bottom line is synchronized central bank money printing has increased the risk of a synchronized collapse. And while recklessly expanding the currency supply can buy time and hide the structural rot within the debt-based International Monetary Ponzi Scheme System, it ultimately kills the currency, destroying everybody’s purchasing power in the process; not to mention their life savings. Got gold?
By the Numbers
How’s the housing market doing in your neck of the woods? In the US, prices are up while inventory is down. With that in mind, here are some year-over-year figures for June:
1,490,000 The number of US homes on the market last month.
$299,000 The median US listing price for June.
9% The increase in the US median listing price from the prior month.
$373,050 The median listing price in Austin; a drop of 4.3% from the prior year.
$338,011 The median listing price in Atlanta; that’s 12.7% higher than last year.
$529,050 The median listing price in Boston; a gain of 6% from the prior year.
Source: Forbes
The Question of the Week
[poll id="222"]
Last Week’s Poll Results
Which economic model do you prefer?
- Capitalism (59%)
- A mixture of both. (38%)
- Socialism (3%)
More than 1400 Len Penzo dot Com readers responded to last week’s question and it turns out that almost 2 in 5 of them prefer an economic model that mixes elements of capitalism and socialism. The trouble is, that system has led to the point we now find ourselves in: with expanding wealth inequality brought about by a hopelessly-broken monetary system that can only be fixed with a hard reset. Mixing socialist programs with free market capitalism is akin to dropping rotted fish heads into a large storage tank of fresh water. One rotted fish head probably won’t render the entire tank of water undrinkable — at least not at first — but over time, and with every new fish head added to the storage tank, that water becomes less and less potable until it is no longer drinkable at all.
Useless News:
A young ventriloquist was touring the clubs. One evening he found himself doing a show in a small club in a small Arkansas town.
With his dummy on his knee, he was going through his usual dumb blonde jokes when a blonde woman in the fourth row stood on her chair and started shouting: “I’ve heard enough of your stupid blonde jokes. What makes you think you can stereotype women that way? What does the color of a person’s hair have to do with her worth as a human being? It’s guys like you who keep women like me from being respected at work and in the community and from reaching our full potential as a person, because you and your kind continue to perpetuate discrimination against, not only blondes, but women in general … and all in the name of humor!”
Clearly embarrassed, the ventriloquist started apologizing, only to be immediately interrupted by the blonde who yelled, “You stay out of this, mister! I’m talking to that little jerk on your lap!”
(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
I get a lot of spam in my inbox. Usually, it’s the product of folks who aren’t very fluent in English:
“Whoah. This blog is excellent! Stay up the great work!”
Well … the fortune cookie writers obviously love it.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
“Well the fortune cookie writers obviously love it.”
anti-asianunmulticulturistic”hate”speech!
What will the thought police think?
I can only imagine.
Nothing!!
The video of the “campground” along a bike trail in California has gone viral. The response of the local government has been to “deconstruct” the camps and move the occupants to alternative shelters.
The nature of those alternatives demonstrates the futility of these “progressive” governments’ adherence to belief that it’s within their power to cure the rot with more government programs.
One jurisdiction has approved the provision of twenty-five thousand “living units” for the “homeless”. That program assures that the jurisdiction will need fifty thousand more, next year. Never mind, fiat money will pay for it (until it can’t).
Another jurisdiction has “authorized” homeowners to house “homeless” folks in their backyard tool sheds. Ironically, the homeowners would be prosecuted if they housed animals there.
Yes, Dave, the only thing these programs do to “help” the homeless is attract more homeless. Don’t tell that to the pols who believe the answer is more government. The city of San Francisco spends a quarter BILLION dollars per year on the homeless — and they are planning on increasing that by 11% this year. Yet they wonder why their homeless problem gets worse with each passing year.
The National Park Service warns us not to feed the wildlife because it causes them to become dependent on handouts. Humans are no different.
Hi Len,
I see help wanted signs everywhere. I also hear a lot of people saying they can’t find a job. Big disconnect!
Sara
I notice that too, Sara. It’s easier to be picky when you can rely on social safety nets (both taxpayer-provided, and familial).
Labor shortages should always be temporary. If employers are having trouble filling certain positions, they need to sweeten the pot by offering higher compensation. Simple economic law of supply and demand.
You would think that’s true, Pete — which brings in to question, just how critical some of these posted job offerings are. I suspect a lot of them are fishing expeditions to see if they can find people willing to work at sub-standard rates.
“Real” wage growth in a country that is $21 trillion in debt (or $200 trillion if you count unfunded liabilities) isn’t possible.
That’s a corollary to this law: “Real” wage growth in a country whose currency isn’t anchored to gold is impossible.
It’s not a coincidence that real (inflation-adjusted) wages have not risen since the US broke the dollar’s anchor to gold in 1971.
Going off the gold standard marked the beginning of the end for the US as a wealthy country. What followed was the theft of our labor through inflation. We would be so much wealthier if the Fed hadn’t stolen so much of our wealth. But 99% of the population is ignorant and choose to be debt slaves, struggling to survive, and distracted by the bread and circuses. For our kids sake the sooner this house of cards collapses the better because the longer it goes on, the harder the recovery.
Len, are you saying the trade wars are a symptom of too many dollars being printed?
Carla, it is a sign that the US appears to be tiring of the side effects that come with having the world’s reserve currency. As Robert Triffin explained, while having the world’s reserve currency bestows the exorbitant privilege of being able to print money with minimal consequences, it also requires the world reserve currency holder to run ever-increasing deficits in order to keep the world supplied with those dollars. Those deficits eventually lead to the loss of manufacturing jobs, which causes unrest at home.
This is the biggest sign yet that the current international monetary system is getting very long in the tooth and will not be around much longer because it is no longer working.
Do you think Trump understands this? If so, does he know how to get us back to a gold/silver standard without our country falling into mass chaos. I do know for certain that Trump is a lover of Gold, Apmex had him on a infomercial even before he was president.
Could Trump bring us to a new Golden (Don) Dawn! 😂 pardon the pun.
I’m not sure if this has been explained to Trump or not. I believe one of his key economic advisors (her name escapes me at the moment) is very well-versed in this and a proponent of the gold standard.