Black Coffee: Reaping the US Dollar Whirlwind

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 is having a great weekend! Okay, away we go …

Money is stored labor. Labor is part of human life. To devalue money is to debase life.

— John Kenneth Galbraith

The last duty of a central banker is to tell the public the truth.

— Alan Blinder, former Fed Vice Chairman

Credits and Debits

Debit: Did you see this? A new survey has found that 49% of all millennials say their spending habits are driven by their friends bragging about their purchases on social media; compare that to just one-third of Americans in general. Sad. Hey … I wonder if the advertising world has caught on to this; if not, they’re missing out on a slam-dunk marketing opportunity.

Debit: In other news, the world economy has been in a significant slowdown for a quite awhile now. How slow, you ask? Well … the best way to visualize the dire situation that the world economy finds itself in is it to look at global trade, which has tumbled to levels last seen during the 2008 financial crisis. See for yourself:

Debit: I see Uber went public last week. But as Bill Holter notes, “Never mind Uber has lost $10 billion over the last three years, and they really have no business plan to earn one thin dime going forward. But Wall Street peddles whatever crap they can peddle. In fact, over the last year roughly 80% of all new issues were for money-losing operations.” Then again, such shenanigans are expected when financial services exceed 20% of GDP.

Credit: Meanwhile, MN Gordon observed this week that, “After a decade of increasing wealth inequality, the masses have reached a moment of certain hopelessness. Currently, people are after an ounce of hope they can latch onto; a means to an easier way is in high demand. Hence, fresh pitchers of Kool-Aid like MMT are being served up to meet this unquenchable thirst.” Wow. That’s so poetic it would make TS Eliot jealous.

Debit: Last week the Fed warned that credit standards continue to slip, as loans to firms with especially high debt now surpasses previous peaks seen in 2007 and 2014. According to a Fed spokesman, “The historically high level of business debt and concentration of debt growth among the riskiest firms could pose a risk to those firms and their creditors.” Uh huh. Thanks for that wickedly astute insight, Captain Obvious.

Debit: Speaking of risk, the latest Social Security balance sheet update reveals that its liabilities are $43 trillion larger than its assets — that’s $9 trillion more than last year. No, really. As a result, America’s national pension plan is now underfunded by 33%; and funds are expected to be exhausted by 2035. The good news for millennials is that SS can remain solvent indefinitely if the retirement age is raised to 105.

Debit: Of course, America’s general fund has fiscal issues too. The Congressional Budget Office forecasts that, starting in 2020, the US will never again see an annual budget deficit of less than $1 trillion. Considering the IRS will collect more than $3.6 trillion this year, it’s clear that the US isn’t in this predicament because of insufficient tax rates. The truth is: America has a spending problem.

Credit: Here’s another nugget of fiscal reality: deficits do matter. This week Michael Lebowitz warned that central bank policies “come at the expense of their currencies, since their value is what supports trust in the currency and allows it to retain its functional purposes — (but) current policy throws all trust to the wind.” Yep. Unfortunately, although the banking sharks are sowing the wind, we’ll all get to reap the coming whirlwind:

Credit: Don’t be fooled; despite the central banksters’ reckless fiscal and monetary policies, they’re macroeconomically “woke.” The proof is in their actions, as the world’s central banks have drastically reduced their purchases of US Treasuries, while simultaneously increasing their gold purchases. Why? Because they know the debt-based paper currencies they issue are in their death throes. Just don’t tell that to Ben Bernanke:

Credit: The bottom line is that gold and silver are essential for liberty; they’re also unparalleled wealth protection, which is more critical than ever. As Alasdair Macleod notes, “Failure to control monetary debasement invalidates the concept of a state-issued (fiat) currency.” Precious metals have been used as money for 5000 years because they maintain their value over time. Despite his testimony, Ben Bernanke knows this. It’s imperative that you do too.

By the Numbers

This week Forbes released its annual summary of the world’s biggest 2000 companies. Here are the top ten industry sectors in terms of total companies that made the list. Do you notice anything in particular about three of the five biggest industries? (Hint: They make up 28% of the 2000 largest companies.)

10 Food, Drink & Tobacco (75 companies)

9 Utilities (84)

8 Business Services & Supplies (88)

7 Consumer Durables (90)

5 (tie) Materials (102)

5 (tie) Insurance (102)

4 Oil & Gas Operations (110)

3 Construction (123)

2 Financials (145)

1 Banking (308)

Source: Forbes

Last Week’s Poll Result

How much was your federal income tax refund this year?

• More than $1000 (48%)
• I didn’t get a refund. (32%)
• $1000 or less (20%)

More than 1500 Len Penzo dot Com readers answered last week’s survey question and it turns out that, just under half of them got a juicy tax refund from the IRS totaling more than $1000. On the other hand, more than a third didn’t get any refund at all, including yours truly; I actually ended up writing a small check to the tax man this year.

If you have a question you’d like to see featured here, please send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.

The Question of the Week

[poll id="268"]

Useless News: The Biplane Ride

Stumpy and his wife Martha went to the state fair every year.

Every year Stumpy would say, “Martha, I’d like to ride in that there biplane.” And every year Martha would say, “I know, Stumpy, but that biplane ride costs ten dollars, and ten dollars is ten dollars.”

One year, Stumpy and Martha went to the fair and Stumpy said, “Martha, I’m 75 years old. If I don’t get a ride in that biplane this year I may never get another chance.”

Martha replied, “Stumpy, that there biplane ride costs ten dollars, and ten dollars is ten dollars.”

The pilot overheard the old couple and said, “Folks, I’ll make you a deal; I’ll take you both up for a ride. Now … if you can stay quiet for the entire ride and not say one word, then I won’t charge you — but if I hear so much as a peep, then it’s ten dollars.”

Stumpy and Martha agreed to the pilot’s terms and up they went.

The pilot did all kinds of twists and turns. Then he did several barrel rolls and a couple of dives, but not a word was heard. So the pilot did all of his tricks over again.

Still, not a word.

After they landed the pilot turned to Stumpy and said, “By golly! Mister, I did everything I could think of to get you to yell out, but you didn’t make a sound.”

Stumpy replied, “Well, I was gonna say something when Martha fell out, but ten dollars is ten dollars.”

(h/t: Cowpoke)

Other Useless News

Here are the top — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:

1. Newfoundland & Labrador (2.10 pages/visit)
2. Quebec (1.78)
3. British Columbia (1.73)
4. Manioba (1.71)
5. Ontario (1.62)

9. Nunavut (1.50)
10. New Brunswick (1.39)
11. Prince Edward Island (1.33)
12. Yukon Territory (1.25)
13. Saskatchewan (1.13)

Whether you happen to enjoy what you’re reading (like those crazy canucks in Newfoundland & Labrador, eh …) — or not (ahem, you hosers living on the frozen Saskatchewan tundra) — please don’t forget to:

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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 me at: Len@LenPenzo.com

After reviewing my article highlighting tips to consider before hiring a concrete contractor, Mrs. Wilson wrote:

You rock, Len!

Heh. I see what you did there, Mrs. Wilson … but thanks for the sediments.

If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message.

Photo Credit: (coffee) brendan-c