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 enjoying their weekend. I know I am … so let’s get this show on the road.
When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; and when lenders desert credit markets for other alternatives such as cash or real assets.
— Bill Gross
Credits and Debits
Debit: Did you see this? According to a recent survey, 4 in 10 people say they regret how they’ve lived their lives so far. The two biggest regrets were spending too much time at work, and not traveling enough. Those were followed by living an unhealthy lifestyle, and not making more family time. Huh … Apparently, I’m the only one who regrets wasting two hours of his life watching John Travolta play the title role in Gotti.
Debit: In other news, I see that hyperinflation has returned to Zimbabwe. The citizens can thank their government, which banned all currencies except for the Zimbabwe dollar last month. Since then, prices for everything from sugar to cooking oil to building materials have tripled. The good news is, government bureaucrats insist their new dollar has “officially” lost just 28% of its original value in the past month. So there’s that.
Debit: Speaking of inflation, as a reminder of just how brainwashed the mainstream media has become, the Financial Times ran an article this week about the sitting Fed Chair with the following headline: “Powell seeks a cure for disease of low inflation.” You can’t make this stuff up, folks. Low inflation, huh? I guess that’s just more proof that if you consistently repeat a lie, most people will eventually believe it. Sad.
Credit: On a somewhat related note, New York Fed head John Williams suggested last week that they need to quickly cut rates to 0%. Why? Well … according to market analyst Graham Summers, with Deutsche Bank imploding, liquidity issues within China’s banking system, and a temperamental US stock market, “something big is coming.” Uh huh … In fact, I had the exact same feeling last night after eating here:
Debit: But seriously, forget 0% … Europe has been embracing negative rates for quite a while now. For the first time ever, the yield on Greece’s 10-year sovereign bonds fell below 2%, which puts them lower than US Treasury yields — even though, at 181%, Greece’s debt-to-GDP ratio is significantly higher than the US’s 105% figure. As if anyone needs more proof that the global monetary system is hopelessly broken.
Debit: What’s that? You say you do need more proof that the Ponzi scheme known as our global debt-based fiat monetary system is broken? Okay. Consider this: This week, the 50-year Swiss bond yield went negative. Think about that; people are agreeing to pay the government to take their hard-earned cash and hold it for 50 years. It’s even worse when you consider lost purchasing power after 50 years of inflation.
Credit: Unfortunately, when it comes to monetary policy, the central bankers have no more tricks up their sleeves. As financial analyst Patrick Watson notes, it used to be that “When the economy slowed, the Fed would cut rates to encourage borrowing and investment. The problem is that easy money stops working when it becomes normal, as it is now; (low rates) only work if borrowers think it’s a limited-opportunity, which they don’t.”
Credit: Okay … so Fed policy may prove to be impotent from this point forward, but give them credit: The central bankers have their next round of cuts on the launch pad anyway, waiting to ignite yet another powerful financially-engineered global economic expansion. The trouble is, this is going to be the result …
Credit: Of course, despite the shortage of rocket fuel, the Fed has no choice but to try another round of rate cuts anyway. And it may work, if only for a little while. As financial analyst Lance Roberts notes, “Asset prices could rise in the short-term given the ‘training’ investors have received over the last decade to ‘buy the dip.’ However, the rate cuts won’t change the onset, duration, or intensity of the coming recession.” Uh oh.
Debit: So if the world’s central bankers are now a hostage to rock-bottom interest rates because raising rates would strangle global economic growth and trigger the implosion of our debt-based international monetary system, where do we go from here? Well … not far. After nearly 50 years of reckless debt accumulation, the end of the road is just around the corner — along with the painful reckoning that comes with it.
Debit: With that in mind, it’s certainly no coincidence that JP Morgan announced this week that they believe the dollar could soon lose its reserve currency status “due to structural reasons and cyclical impediments.” Ya think? You know, up until a few years ago only the tin-foil-hat brigade — including yours truly — and doomsday preppers dared to make such a “crazy and impossible” claim. Not any more. Why?
Debit: Here’s the punchline: A loss of reserve currency status means most Americans without wealth insurance will experience a substantial reduction in their current living standard. Then again, the US government will require a massive downsizing too. The question is: Is Washington DC ready for it? Are you?
By the Numbers
Europeans have already been struggling with the heat this summer, but meteorologists warn that it’s going to get even hotter this weekend:
102℉ The all-time high in Belgium, which was recorded earlier this summer.
101℉ The highest temp ever recorded in the UK. (Favershan, England)
102℉ The expected high temp in the UK this weekend.
106℉ Last Tuesday’s temp in Bordeaux, France.
108℉ This weekend’s expected high temp in Paris.
114℉ The all-time high temp in France, which was recorded on June 29th. (Gallagues-le-Montueux)
The Question of the Week
Last Week’s Poll Results
What is your biggest financial worry?
- Outliving my retirement savings (50%)
- Major medical expenses (17%)
- Losing my job (16%)
- Making ends meet on current income (11%)
- Something else (4%)
- College education expenses (2%)
More than 1700 Len Penzo dot Com readers responded to last week’s question and half of them say their biggest concern is outliving their retirement savings. I’m happy to see that only 1 in 9 say they’re worried about making ends meet on their current income. I guess the low number is to be expected among those who visit personal finance blogs!
If you have a question you’d like me to ask the readers here, send it to me at Len@LenPenzo.com — and be sure to put “Question of the Week” in the subject line.
Useless News: Frogs
A little boy kept pestering his Grandpa, “Make a sound like a frog. Make a sound like a frog!”
After several hours of this, Grandpa finally asked his grandson, “Why on earth do you want me to make a sound like a frog?”
The boy replied, “Because I heard Mom and Dad talking. They said that as soon as you croak, we can go to Florida!”
(h/t: Kerri L.)
Other Useless News
Here are the top five articles viewed by my 26,713 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- The 13 Most Important Items to Keep In Your Fireproof Safe
- 5 Signs That Your Spending Is Out of Control!
- What Were They Thinking? The 10 Biggest Grocery Product Flops
- 6 Ways to Avoid Becoming Small-Minded About Money
- Online Jobs You Can Start Doing From Home Today
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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 Len Penzo dot Com article explaining how to save money by managing your own investment portfolio, Eve left this curious comment:
What a stuff of unambiguity and valuable experience regarding unexpected feelings!
Thank you, Eve … I think.
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Photo Credit: brendan-c