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.
Wow! Another week has come and gone — so without further ado, let’s get this show on the road.
Interest works night and day; in fair weather and in foul. It gnaws at a man’s substance with invisible teeth.
— Henry Ward Beecher
Debt is a prolific mother of folly and crime.
— Benjamin Disraeli
Chains of habit are too light to be felt until they are too heavy to be broken.
— Warren Buffett
Credits and Debits
Credit: Did you see this? In 2018 the median US household income was $63,179. Furthermore, after falling 0.5% last year, the official US poverty rate is now 11.8%; the rate has now fallen four consecutive years. As a result, poverty levels are significantly lower than they were in 2007, just prior to the Great Financial Crisis. Really? You’d never know it looking at all of the homeless people living in America’s largest cities.
Debit: Poverty may be on the decline, but the average millennial is in debt to the approximate tune of $27,900 — and that doesn’t include the mortgage. As for Gen Z, the oldest of which is just 22 years old, they carry an average debt load of $14,700. Then again, in today’s credit-based society — where delayed gratification and saving is only for suckers — that really shouldn’t be too shocking.
Debit: Here’s the reality: There’s simply a limit to how much debt each household can carry — even at historically low interest rates. This is why business owners remain on the defensive, reacting to demand increases due to population growth, rather stronger economic activity. This suggests that despite more debt, the economy is failing to sustain economic growth; in fact, growth is actually declining.
Debit: As Lance Roberts observes, “While debt can fill an immediate spending need, it doesn’t always lead to economic growth. It’s actually the opposite; debt detracts long-term growth as it diverts productive capital to debt service. Higher interest rates equals higher debt servicing requirements which in turns leads to lower economic growth.” Unfortunately, this is the debt trap we’re now hopelessly mired in.
Debit: Speaking of debt, and spurred on by desperate investors searching for yield, I see that the banks are packaging and selling mortgages by reviving the so-called private-label market for mortgage bonds, which imploded during the 2008 financial crisis. Yes, the banks got beat to a pulp the last time they tried this — and they’ll undoubtedly be pummeled this time too. That begs the question: Why do it again? Well … I’ll let this guy explain:
Debit: In other news, Zimbabwe is facing another hyperinflation scare as prices soar and its central bank sharply hikes rates to delay yet another currency collapse. In fact, Zimbabwe’s central bank raised its overnight borrowing rate last week from 50% to 70%. Yes, that’s one way to encourage people to save, thereby reducing money velocity. The trouble is, the inflation rate is many multiples higher than that.
Debit: Of course, along with Zimbabwe’s spiraling inflation comes the requisite chronic food and electricity shortages. Not surprisingly, the government has stopped releasing annual inflation data — as if that will fool anyone — but the estimated rate is currently nearing 570%. Meanwhile, the nation’s civil servants are demanding raises to regain their decimated savings and purchasing power. Heh. Good luck with that, folks.
Debit: Thankfully, the US dollar still enjoys the confidence of markets, governments, and central banks. For now. But that faith continues to weaken a little every year, as the amount of dollar-denominated global debt continues its inevitable — and mathematically guaranteed — climb to the sun at an ever-increasing rate. A rate that, at some point, will lead to a massive — and sudden — reduction in the dollar’s purchasing power.
Debit: The “good” news is, the central banks have a plan for dealing with all this debt. And, according to Tom Luongo, “What comes next is right in front of your nose: The end of cash, a crypto-version of the SDR, and a social credit system to ‘unperson’ anyone who steps out of line.” Huh. Who could ever object to a plan like that? I sure hope somebody is eventually knighted for such a brilliant proposal …
Credit: For his part, US Rep. Alex X. Mooney (R-West Virginia) is trying to get answers from the US Treasury, Fed, and the CFTC about covert interventions by the US government in the financial and commodity markets — but particularly the gold and silver markets. Not surprisingly, he is being stymied on almost every front — because the dollar’s continuing status as the premier global reserve currency depends on it.
Credit: Chris Powell says the government stonewalling strongly suggests the US is “deeply involved” in market manipulation. He also notes that if the mainstream media had the courage and integrity to address it, “then the market rigging and the imperialism the rigging represents might be defeated — and free and transparent markets restored, along with limited and accountable government.” Amen. Until then, the fraud will continue.
By the Numbers
With school now well underway in most — if not all — of the US, here are some numbers on the current academic year:
56,600,000 The number of students expected to attend public and private elementary and secondary schools this year; that’s 100,000 more than last year.
5,800,000 Students who are expected to attend private schools this year.
$13,440 The projected per student expenditure in public elementary and secondary schools in 2019-2020.
3,200,000 The number of public teachers working in fall 2019.
500,000 The number of private teachers working in fall 2019.
3,700,000 The number of students expected to graduate from public and private high schools in 2020.
19,900,000 The number of students expected to attend American colleges and universities this fall.
56.7 The projected percentage of female college students in fall 2019.
The Question of the Week
Last Week’s Poll Result
Who handled the family’s personal finances when you were growing up?
- My mother (47%)
- My father (29%)
- Both parents (17%)
- I’m not sure (6%)
More than 1700 Len Penzo dot Com readers answered last week’s survey question and it turns out that, for almost half of them, mom was the household CEO. Curiously, 6% of those who responded wasn’t sure who handled their family finances when they were growing up. In my house, it was Mom who managed the money — at least most of the time.
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.
Useless News: Who’s the Dummy?
Little Johnny was always teased by the other neighborhood boys for being stupid. Their favorite joke was to offer Johnny his choice between a nickel and a dime — because Little Johnny always took the nickel.
One day, after Johnny took the nickel, a neighbor took him aside and said, “Johnny, those boys are making fun of you. Don’t you know that a dime is worth more than a nickel, even though the nickel’s bigger?”
Johnny grinned and said, “Well, if I took the dime, they’d stop doing it, and so far I’ve made $20!”
(h/t: RD Blakeslee)
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. New Brunswick (2.50 pages/visit) !
2. Quebec (1.88)
3. Manitoba (1.76)
4. Alberta (1.61)
5. Ontario (1.53)
9. Prince Edward Island (1.10)
10. Saskatchewan (1.08)
11. Northwest Territories (0.00) !
12. Yukon Territory (0.00) !
13. Nunavut (0.00) !
Whether you happen to enjoy what you’re reading (like those crazy canucks in New Brunswick, eh … for the second month in a row!!) — or not (ahem, all you hosers living on the frozen tundra north of the 60th parallel) — 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 reading my article discussing tip inflation, Jeff shared this:
In Japan there is NO tipping and the service is excellent — a point of pride, or service. It’s like the server is saying, ‘If I take no money from you, then you know my service was sincere.’ A tip is an insult.
You can bet there are servers in America who often consider some of their tips to be insulting too.
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