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 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.
— Buddha
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:
Still the greatest financial crisis explanation rant ever.
See if you note anything different 10 years later.#wankingbankers pic.twitter.com/FHutYeSJqDSven 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
[poll id="261"]
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
Hey, while you’re here, please don’t forget to:
1. Click on that Like button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!
2. Make sure you follow me on Twitter!
3. Subscribe via email too!
And last, but not least …
4. Consider becoming a Len Penzo dot Com Insider! Thank you.
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.
If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
Shouldn’t we spend all our money before the world economy collapses and it’s taken ??
Spending much of mine on Precious Metals! I love Lynette’s saying “Shields are made of metal, not paper”!
I like Lynette, although I do disagree with her on a few minor points.
OK. I guess I am not in the club. Who is “Lynette”?
Lynette Zang
Mik, the trouble is nobody knows when the day of reckoning will actually get here. A better course of action is to make sure you have some wealth insurance in the form of physical precious metals in your portfolio, stop worrying, and go on and live you normal life.
Arlington, VA zip code: 22202; closure of as single road produced this:
https://www.arlnow.com/2019/03/28/breaking-traffic-nightmare-continues-as-i-495-inner-loop-remains-closed/
My zip code: 24983, where, the closure of any of our roads wouldn’t make much difference.
What would happen if the consequences of the inevitable financial crisis discussed in “Black Coffee” this morning, forced you to try and get out of town?
Here is a very interesting, accurate description of the demographic within any zip code in the U.S: https://www.esri.com/en-us/arcgis/products/tapestry-segmentation/zip-lookup
Plug your zip code and the two zip codes above and appraise the relative chances.
Keeping a few months worth of preps stored in the form of food, water, medicine and other necessities will go a long way toward reducing any need to skip town in the event of potential supply chain disruptions.
I’d disagree with you there Len.
IF the supply chain is disrupted for a couple months, odds are pretty good it ain’t coming back…..since the folks needed for it to come back will have starved to death.
Vast number of folks in this country have no clue how many other folks have to eat and go to work in order for them to provide the basic services of life for the rest of us.
So, yes, have enough stuff set aside for a week or two in case of storms, earthquakes, etc…temporary, localized disasters. Or go to the other end of the scale, have a couple years worth of food to get you thru the learning curve (and Murphy’s Law) of being able to grow food for the long haul.
I’ll leave it to you to figure which end of that scale I’m on !
We’ll see, Andy! I guess in this instance I am a relative optimist. I just don’t think the powers-that-be will let something that can be fixed relatively easily go on for such a long period of time. I’ve currently got a minimum of six months of stores on hand. I expect that to be enough to handle disruptions due to a catastrophic earthquake or financial collapse. If I am wrong, then I am not sure even one or two years would ever be enough!
Hi Len,
Thanks for another great cup of coffee. That interview was the best!
Sara
Thanks, Sara! I thought so too.
Ross Perot stood on the edge with a warning and was ignored. The Fed continues spinning plates but a lot of them are beginning to wobble. We should all be preparing for the inevitable.
Although he was mocked by many, history has proven Perot to be correct on many of his predictions regarding the American economy. I was one of the 20% of voters who cast a ballot for him in the 1992 presidential election. Maybe things would have been different if he had chosen a better VP running mate!
Let’s ignore the massive U.S. unfunded liabilities. Just look at the annual numbers published for the “national debt” since 1900. Calculate the rate at which the debt has grown – it’s a little more than 8%, doubling the debt every 9 years or so. Compare that to how the economy grows. It doesn’t grow at 8%. It doesn’t even grow at ** half ** that rate.
So what do you think would happen to your own finances if your debt expanded at 8%, but your income only expanded at 4%; how long before you couldn’t even pay the interest on your debt? Then toss in the unfunded liabilities for Social Security, government pensions and Medicare and it’s easy to see that not only will the national debt never be repaid, but financial chaos will follow as this house of cards collapses.
Now look at the obligations of the individual states for their bonds, and for their unfunded pension obligations to their retired employees. It’s the same mess!
This is what happens when you create a monetary system based on paper debt instead of what the U.S. Constitution requires, gold and silver coins. Paper is cheap. But gold and silver require work to be mined, which limits how much the money supply can be expanded.
The Fed makes bank debt money, and the way the bank money is expanded is to create it out of thin air and loan it out in return for the debts of people, businesses, and governments. The Fed system is designed to make everyone an indentured servant of the banks. There’s no greater scam than fractional reserve banking held together by a centralized monetary authority. Karl Marx listed central banking as a plank of communism.
I am pretty sure there was never any intention of paying all the debt off. It won’t be paid down either. The banksters will keep rolling the debt over until until the house of cards comes down. That won’t happen as long as confidence remains.
Great comment, Sid.