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 everybody had a great week. I know I did. Of course, I love weekends even better, so let’s dig right in and then I’ll get mine started.
The corruption of the best things gives rise to the worst.
— David Hume
You will not be punished for your anger, you will be punished by your anger.
Credits and Debits
Debit: Stop me if you’ve heard this before: 48% of Americans who are 55 and older have nothing saved in a 401(k) or IRA. That’s right; zero. Nada. Zilch. Zippo. The good news is two in five households do have access to a pension — assuming those stay solvent. On the other hand, 29% of older Americans had neither a pension, or assets in a 401(k) or IRA account. Yikes.
Debit: On a related note, the Fed has raised its benchmark rate from 0.25% to 2.5%, but US regional banks are still raping customers with paltry saving account payouts; on average, just 0.05%. Uh huh. It’s even worse at the big banks: Citi pays 0.04%, and JP Morgan offers 0.01%. So if you consider actual inflation — not the manipulated CPI rate — then real saving account interest rates are close to negative 10%. #bendoversuckers
Credit: Speaking of inflation, Bill Fleckenstein asks: “Can somebody stop these idiot central bankers from misusing the English language? They say they want more inflation; no one wants more inflation. With inflation comes nothing but misery. No one minds when product prices drop. What they mean when they say they don’t want deflation is they don’t want a depression.” Then again, people in hell want ice water too.
Debit: The Fed may not want a depression, but the odds of a recession are certainly growing. Why is that, you ask? Well .. it’s because, for the first time since 2007, there is now an inversion of the 3-month-10-year curve. Such an inversion has occurred six times over the past 100 years or so, and a recession followed shortly thereafter every single time. But, hey … that’s probably just a quirky coincidence.
Debit: Meanwhile, the US Treasury Department reported this week that the government ran a budget deficit of $234 billion in February — that’s the biggest monthly shortfall on record. And it is all the more remarkable considering that this is during a so-called economic expansion. If you think the deficits are bad now, just wait until the next official recession hits.
Credit: During the next downturn, US funding requirements will skyrocket, as will interest on debt payments — and wealth inequality will only continue to get worse too, which is why Sven Henrich is asking if there is, “Any wonder why people are pissed off and political movements are starting to gravitate toward redistribution?” It’s true, folks. People are pissed. And if you don’t believe that, then how do you explain this?
Debit: Of course, as Jesse Colombo observes, “Our economy is completely addicted to monetary stimulus and both (Washington and Wall St.) are advocating for the Fed to keep pumping in order to keep the fake boom alive. The Fed will throw everything, including the kitchen sink, at trying to prop up the wildly inflated stock market and economy, to no avail.”
Debit: Some would argue the Fed is already in panic mode. It’s now painfully apparent that December’s stock market tantrum convinced the Fed to give up its attempt to retire the emergency monetary policies it implemented at the onset of the Great Financial Crisis of 2008. In fact, the writing on the wall is plain to see for anyone who cares to pay attention to it: more QE is coming.
Credit: Then again, a few people clearly have been paying attention, as this man-on-the-street interview shows:
Sven Henrich (@NorthmanTrader) January 24, 2019
Credit: Obviously, with the Fed out of bullets, the next economic downturn is not going to end well. Peter Schiff explains exactly where this runaway train is headed: “The Fed can’t keep unloading bonds at the same time that the Treasury is selling them like they’re going out of style; which is why we’re going to have a sovereign debt crisis and a currency crisis.” Yes — although most Americans would say that’s utterly unpossible, Peter.
By the Numbers
A single ticket sold in Wisconsin matched all six numbers in this week’s Powerball drawing. Here are a few more facts:
$768,400,000 The before-tax prize if the winner decides to take the annuity option, which is paid over 29 years.
$477,000,000 The before-tax prize if the winner decides to take the lump sum option.
3 The latest Powerball jackpot’s ranking among the largest US lottery prizes ever awarded.
$1,586,000,000 The before-tax prize for the biggest US lottery prize, which was awarded in 2016. (That is also the world record.)
1:292,200,000 The odds of matching the five white balls and single Powerball needed to win the jackpot.
7 The number of tickets in the latest lottery drawing that matched all five white balls, but missed the red Powerball — resulting in a $1 million consolation prize.
44 States that participate in the Powerball lottery.
Source: NBC News
The Question of the Week
Last Week’s Poll Results
Are physical precious metals included as a part of your retirement savings portfolio?
- No (91%)
- Yes (9%)
More than 1400 people responded to this week’s poll and it turns out that just 1 in 11 Len Penzo dot Com readers currently include physical precious metals as part of their retirement savings portfolio. And while that may seem like a small number, it’s actually about nine times higher than the general investing population. That’s right; less than 1% of all investors protect their savings with wealth insurance. For their sake, let’s hope the full faith and confidence in the US government’s ability to make good on its fiat-based promises continues to hold up.
Useless News: Big Coincidence
A chicken farmer goes to the local cafe. He sits next to a woman and then orders a glass of champagne.
The woman says: “That’s weird; I’ve just ordered a glass of Champagne!”
“Well, it’s a special day for me,” says the breeder. “So I’m celebrating.”
“Wow! I’m celebrating a special day for me too!” says the woman.
“That’s quite a coincidence!” the breeder says. “What are you celebrating?”
The woman said, “My husband and I have been trying to have a child for years, and today my gynecologist told me that I was pregnant!”
“What a coincidence!” said the chicken farmer. “I’m a breeder of poultry and for years all my hens have been infertile — but today they all laid fertilized eggs.”
“That’s great!” said the woman. “So how did you make your hens fertile?”
“I used a different rooster,” he replied.
The woman smiled and said: “What a coincidence!”
(h/t: RD Blakeslee)
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 a blog post here by staff writer Tex Freitag on ways to help improve your credit score, Paul left this comment:
“I contacted a consultant who helped fix my credit and he was able to deliver. He helped me increase my credit score to 800 and paid off all my debt collectors. I was satisfied with his service. The bad news is it cost me $10,000.”
Good for you, Paul. I think.
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Photo Credit: brendan-c