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.
Despite the continuing economic slowdown, I hope all of you have a thoroughly enjoyable weekend.
Okay, let’s get right to it …
Mischief springs from the power moneyed-interests derive from a paper currency which they are able to control …
— Andrew Jackson
So this is how liberty dies … with thunderous applause.
— Senator Padme Amidala in Revenge of the Sith
Credits and Debits
Debit: Did you see this? A food bank in Richmond, Virginia, has been doling out more than one million meals per month as the metro area continues to battle the self-inflicted economic carnage imposed in the name of fighting the COVID-19 pandemic. The food bank says conditions are so bad that they’re now feeding three times more people than last year. I guess nobody told them that the stock market is still hovering near all-time highs.
Credit: Speaking of the stock market, asset manager Michael Pento is warning that there’s “a huge divergence” between the stock market and the real economy. With valuation in all equities now at 180% of GDP, Pento says, “Rod Serling couldn’t have imagined how crazy they’ve become.” Compare that to March 2000, when valuations were 140% of GDP; not coincidentally, the drunken NASDAQ plunged 85% shortly thereafter — kinda like this:
Debit: Then again, the stock market can stay irrational longer than most people can remain solvent. And although silver has had big gains this year — it’s up almost 50% year to date — that pales in comparison to more than a few stocks, including the absurdity known as Tesla, which has rocketed 468% this year before retreating to roughly 393% today.
Ticking time bomb … https://t.co/mBzlU8ivJb
Len Penzo (@LenPenzo) September 15, 2020
Debit: I know many dumbfounded silver proponents who can only shake their heads at Tesla’s dubious returns. In fact, for silver to match Tesla’s performance over the past year, it would have to hit $160 — give or take a few bucks. Don’t laugh; the white metal has seen similar triple-digit returns in the past. As precious metals analyst Jeff Clark notes, “Given the monetary crisis that’s still ahead, that’s not so far-fetched.”
Credit: Mr. Clark has a point; despite its recent run-up, silver appears to be undervalued by any reasonable measure. Especially when you consider that, at $27 today, silver is still 45% cheaper in nominal terms than it was 40 years ago — and 83% off the inflation-adjusted price — when it was selling for $50. Even so, silver has more than maintained its purchasing power; a silver US quarter minted in 1964 can still buy a gallon of gasoline. If not two.
Credit: On a related note, macroeconomist Alasdair Macleod reminds us that “the natural state for a progressing economy isn’t one that sees continual inflation — which is a monetary policy objective (today) — but gradually falling prices, as experienced under the gold standard in the nineteenth century.” Uh huh. That’s because, over time, intrinsically worthless fiat currencies always lead to scenes like this:
Debit: By the way, if we still had an honest monetary system backed by precious metals, an increase in the quantity of goods and services could only result in a decline in the general level of prices. More to the point: the purchasing power of long-term savings under a gold standard gradually increases over time — eliminating the need to speculate for higher returns in order to overcome the adverse effects of inflation. Imagine that.
Debit: Unfortunately, for now we’re stuck with the Fed’s fraudulent debt-based monetary system — which is why Fed Chair Jerome Powell told the world this week that, in an effort to “boost the economy,” the Fed will not only continue its quest for higher inflation, but they’re also maintaining their criminally-toxic zero-interest rate policy through 2023. Folks, if you think that makes absolutely zero sense, well … join the club.
In solidarity with the Fed, I will be maintaining my policy of eating more until I’m taller.
Hasn’t worked yet, but it’s just flat out true that on average, taller people eat more.
The logic is basically flawless.
Travis K (@coloradotravis) September 16, 2020
Credit: Of course, as the great Franklin Sanders observed after this week’s Fed presser, “Truly, a nation without a central bank is like a lamprey eel without an oboe. What would we do if we didn’t have Fed Head Criminal Jerry Powell to get on the television and tell us how much he is helping us by wrecking the economy and the dollar? For laughs we’d have to play Russian roulette with six bullets instead.” Don’t expect me to try and improve on that; I can’t.
Credit: So why do governments prefer fiat currency? As Macleod wisely reminds us, free markets backed with honest money “discourage profligacy, indolence and needless borrowing; and allow the vast majority to provide for their own health and retirement, freeing the government from onerous welfare obligations.” Put another way: A self-reliant public that uses precious metals as money keeps a heavy yoke on an empire’s power. It’s as simple as that.
By the Numbers
Remember when vaping was all the rage with high school kids? Well … those days appear to be ending:
3,600,000 Total number of teens who currently use e-cigarettes.
1,800,000 Total drop in the number of American teens currently using e-cigarettes, compared to 2019.
28% Percentage of high schoolers who used e-cigs last year.
20% Percentage of high schoolers who vape in 2020.
5% Percentage of middle schoolers who use e-cigarettes today; that’s down from 11% last year.
33% Workforce reduction announced this year by e-cigarette maker Juul.
11 Number of countries where Juul is considering pulling its products off the shelf.
Source: Marker
The Question of the Week
[poll id="339"]
Last Week’s Poll Result
When was the last time you had an alcoholic beverage?
- Within the past month (66%)
- I don’t drink (20%)
- More than a year ago (8%)
- Within the past year (5%)
More than 2100 Len Penzo dot Com readers answered last week’s poll question and it turns out that almost 3 in 10 of either don’t drink or have not had an alcoholic beverage in more than a year — which is surprising considering this has been a year that has probably driven more than few people to hit the bottle who wouldn’t do so otherwise. That being said, Len Penzo dot Com readers appear to enjoy their adult beverages slightly more often than the average American; according to a survey by the National Institute of Alcohol Abuse, 55% had a drink in the past month and another 15% in the last 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.
Useless News: Man of the House
A man and woman were about to enjoy the first evening of their honeymoon. The husband took off his pants and handed them to his new wife. He then said, “See if they fit.”
Slightly amused, the wife decided to play along. So she put the pants on, but they were so loose that they immediately dropped to the floor. With a wink and a wry smile, the new bride said, ”Oops! They don’t fit at all.”
”That’s right,” her husband replied sternly. “And now you know who will wear the pants in this house.”
The wife, taken aback, thought for a little while. She then slipped off her panties and asked her husband to try them on.
Holding the tiny panties in his hand, the man complained, ”I can’t get into these!”
”That’s right,” said his wife. “And with that attitude you never will.”
(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. Quebec (2.01 pages/visit)
2. Saskatchewan (1.84)
3. Newfoundland & Labrador (1.77)
4. Alberta (1.64)
5. British Columbia (1.61)
9. Yukon (1.50)
10. Manitoba (1.47)
11. Nova Scotia (1.40)
12. Nunavut (1.33)
13. New Brunswick (1.00)
Whether you happen to enjoy what you’re reading (like those crazy French Canadiens in Quebec, eh) — or not (ahem, all you hosers living on the frozen New Brunswick 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 reading an article on my blog that described one key situation where an English degree may be a sound investment (no, really), Diane Roberts Powell had this to say:
Well, I do have an English Degree, but I’m a poet, not an engineer. I’d say the major of your undergraduate degree isn’t all that important.
Uh huh. Tell that to the countless people with college degrees who get paid to ask: “Do you want fries with that?”
If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message.
Photo Credit: stock photo
Hi Len,
I’d be so happy if silver gets to $50! I’ve seen a few people say silver is going to hit $100 in the next year or two. I’m not so sure.
Do you think triple digit silver is realistic?
Sara
I’ll go out on a limb and say you will see triple digit silver somewhere in 2022-23! It could go much higher. I looked at the usdebtclock going out to 2024 and the prices of gold and silver will make your jaw hit the floor! Gold is nearing $70,000 per ounce and Silver $9,167. 2020 is listed for Gold to be $30,000 and Silver $3,975. However the metals are kept from reaching this price due to massive manipulation, but I have heard much chatter lately that the Comex (I like to call it Crimex) is about to crack, which will help remove much of the manipulation. The usdebtclock has many more interesting categories to study. The derivative debt will blow your mind!
In a word: I absolutely believe it is realistic to expect silver reaching $100 in the next year or two. The problem is: nothing is ever guaranteed.
The Tesla mania reminds me of the DotCom bubble, only on steroids.
Mania is one way to put it. For many people, it has become a religion.
Len, I’m relatively new to your blog. I will say you’ve got me thinking about buying some gold and/or silver for protection. Do you prefer one over the other?
I think most people dabbling in precious metals would be wise to start with silver first and then work their way up to gold.
I don’t understand. If inflation starts to get out of hand, don’t wages tend to go up too?
Yes; the trouble is, the wage increases lag the rising prices — so most people end up struggling when it comes to paying the bills. The middle and lower-classes will also find that their wage increases will barely be enough to cover their rising food, rent and utility bills — leaving them with very little discretionary income.
The printing machines keep going brrrr, but the bankruptcies are right around the corner. When the credit bubble bursts it will be deflationary.
True. But since our debt-based monetary system will implode in the presence of sustained deflation, the Fed will be forced to print as much currency as needed to keep the bubble inflated. Deflation is not an option.
The Federal Reserve doesn’t care about inflation. They’re all about robbing us of every last penny, and that’s exactly what they are doing.
People need to wake up. (But they won’t.)
Correct. If this keeps up, at some point they will own everything — by buying up every asset with their fiat funny money printed out of thin air. It is truly criminal.
Any idea how long the system can go on like this before everything blows up?
The Kraken
I have no idea, Kraken. But the growing debt is definitely on the “business end” of the exponential curve. I’ll just say sooner rather than later.
“Paper money eventually returns to its intrinsic value zero.
~ Voltaire
That it does.