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.
Okay, let’s get right to it this week …
I’d call it a new version of voodoo economics, but I’m afraid that would give witch doctors a bad name.
— Geraldine Ferraro
He who sells what isn’t his’n, must buy it back or go to prison.
— Daniel Drew
Credits and Debits
Debit: Did you see this? The natural gas spot price exploded from $3.46 two weeks ago, to $377.13 last Friday — that’s an increase of 32,000%. And it wasn’t only nat gas — severe electricity shortages are expected to result in many customers seeing four-digit February electricity bills, as prices climb from less than $0.25 per kWh to upwards of $4 per kWh. The good news is those stimulus checks should cover most of it. Well … at least for one month.
so it’s not bitcoin mining?
Macro Monkey 🍌 (@macro_monkey) February 15, 2021
When your electric company tells you to switch but there has been a hold on switching for over a week now. Using as little as possible 1300 sq ft house and this is my bill. . How is this fair. I only paid $1200 for the whole 2020 year @FoxNews @wfaa @tedcruz @GovAbbott pic.twitter.com/AylTS4m0j4
kat and tony (@katandtonyT) February 18, 2021
Debit: Meanwhile, the paper silver price continues to hover near $27 — even though you can’t buy the physical metal anywhere for less than $33 or so. Assuming you can find it. Oh … and did I mention that SLV amended its ETF prospectus this month, all but admitting they have less physical silver in their vaults than they claim? Uh huh. If I didn’t know any better, I’d say Wall St. has been caught red-handed, selling precious metal they don’t have. Imagine that.
The entire SLV prospectus just reads like one big legal disclaimer saying: ‘this is a scam, and we literally told you, so good luck trying to sue us when the rug gets pulled’
Men Among The Ruins (@menintheruins) February 14, 2021
Credit: Billionaire businessman Hugo Salinas Price added perspective on this week’s shenanigans, observing that “in today’s world, money isn’t gold or silver, nor is it an unquestioned claim upon gold or silver. Under the current fiat monetary system, there can be no justice or fair trading because the money is fake — so everyone’s trying to out-smart everyone else. Humanity is fundamentally at war with itself.” Heh. You can say that again …
Debit: In other news, earlier this month the Bank of England told its member banks to prepare for negative interest rates to be used in an effort to ‘stimulate’ the economy. Yes, yes; the BoE clarified by saying they had “no plans” to implement them, but they wanted the banks to be prepared. You know … just in case. Translation: negative rates are coming. And sooner rather than later.
Credit: As economist Daniel Lacalle notes, “Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks that assume inflation and growth are low due to excess savings.” On the other hand, people who are buying those negative yielding bonds are making a big mistake too because they subject themselves to big losses whenever faith in government debt wanes.
Yield curve control is coming
けものみち🇳🇱🇹🇼🇺🇸🇨🇦 (@KemonomichiTX) February 16, 2021
Debit: In fact, negative interest rates are a self-inflicted scourge that results in an anemic listless economy teeming with unproductive companies, caused by excess debt borne from — surprise, surprise — central bank zero-interest rate policies. Or, to put it another way: Central bankers are modern-day financial witch doctors who keep telling us that the patient will get better by simply adding a few more leeches.
Debit: Unfortunately, financial assets are skyrocketing because many investors are gobbling up stocks and debt issued by companies that can only turn a profit — or remain on life support — in this artificially-low interest rate environment. They just better hope the central banks can continue to keep a lid on those rates because, as of now, they seem to be having some trouble.
What if foreign creditors conspire to dump a load of treasuries in coordinated fashion
US looks very fragile at the moment
konan100 (@konan10011) February 16, 2021
Debit: By the way, did I mention that negative rates also make governments more dependent on cheap debt, rather than strengthening the economy? It’s true. After all, the printing press — which ultimately leads to these ridiculously low interest rates — has always been the preferred fiscal “solution” for cowardly spendthrift politicians who endeavor to stay in power by promising benefits to their constituents.
We print with negative GDP growth.
We print with 5%-6% GDP growth.
But we’ll stop printing when GDP drops in half back to 2%.
Who believes this?
Who can believe this?
It is utterly unbelievable.
Sven Henrich (@NorthmanTrader) February 17, 2021
Credit: As Lacalle explains, abnormally-low interest rates result in “a huge transfer of wealth from savers and real wages, to the government and the indebted. A tax on caution. The destruction of the perception of risk that always benefits the most reckless. The bailout of the inefficient.” The impacts used to be hidden, but now the fraud is so rampant that almost everybody can see it. Yes, it’s a rotten deal, but you’ll learn to like it. Eventually …
Debit: Of course, negative interest rates risk bank runs by unwilling savers — which is a big reason why central banks and governments want to eliminate cash. It’s all about control. After all, if all money is electronic, privacy will become a thing of the past; and all wealth will become state-controlled. Not coincidentally, control is why the powers-that-be also discourage private precious metal ownership, and push universal basic income (UBI).
Credit: Speaking of UBI, asset manager Egon VonGreyerz asks, “Why should anyone work when printing money can create 30% of GDP in just 10 months by buying stocks? Investors aren’t worried that stocks aren’t rising due to rising profits or improving fundamentals. What they don’t realize is that a global crash is right ahead — a crash that will destroy 90% of their illusory wealth.” Yes … but you’re preaching to the choir, Egon.
Could have just bought MARA for 89 cents pic.twitter.com/nUc9yB9Hnt
Noah Ruddell (@noahruddell) February 17, 2021
Credit: I know what some of you are thinking: Is there a way to avoid this crash? Of course there is. Best of all, this protection has proved itself time and again throughout 5000 years of human history. It’s wealth insurance; typically 5% or 10% of your net worth in physical gold and silver, held in your possession, away from the scurrilous bankers‘ fraudulent debt-based monetary system. Sadly, the challenge today is finding any on the shelves.
The Question of the Week
Last Week’s Poll Result
What’s the smallest coin you’d ever consider picking up off the street?
- penny (66%)
- none (12%)
- nickle (10%)
- quarter (7%)
- dime (4%)
More than 2200 Len Penzo dot Com readers answered last week’s poll question and it turns out that 2 in 3 of them are still willing to take a lowly penny off the street and put it in their pocket, which is quite remarkable when you consider there isn’t much — if anything — you can buy with a penny these days. Frankly, I wouldn’t consider picking up anything smaller than a quarter off the street — and even that probably wouldn’t be enough.
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.
By the Numbers
Here are the average 401(k) contribution rates as a percentage of compensation by age range during the second quarter of 2019, according to data released by Fidelity Investments:
7.0% The contribution rate for those between ages 20 and 29.
7.8% The contribution rate for those between ages 30 and 39.
8.5% The contribution rate for those between ages 40 and 49.
10.1% The contribution rate for those between ages 50 and 59.
11.2% The contribution rate for those between ages 60 and 69.
Source: Fidelity Investments
Useless News: The Pillsbury Doughboy (1950 – 2021)
The Pillsbury Doughboy died yesterday in Minneapolis of a yeast infection and traumatic complications from repeated pokes in the belly. He was 71.
Doughboy was buried in a lightly greased coffin. Dozens of celebrities turned out to pay their respects, including Mrs. Butterworth, Hungry Jack, Duncan Hines, the California Raisins, Betty Crocker, the Hostess Twinkies, and Captain Crunch. The gravesite was piled high with flours.
Aunt Jemima delivered the eulogy and lovingly described Doughboy as a man who never knew how much he was kneaded.
Born and bread in Minnesota, Doughboy rose quickly in show business, but his later life was filled with turnovers. He was not regarded as a very smart cookie, wasting much of his dough on half-baked schemes.
Despite being a little flaky at times, he still was a crusty old man and served as a positive roll model for millions.
Doughboy is survived by his wife, Jane Dough, and three children: John Dough, Play Dough and Dosi Dough, who has a bun in the oven. He is also survived by his elderly father, Pop Tart.
The funeral was held at 3:50 for about 20 minutes.
He will be remembered for always rising to the occasion and cheering up someone having a crumby day and kneading a lift.
(h/t: RD Blakeslee)
More Useless News
I currently have nine followers at Gab. Hooray! Here’s hoping one of you out there will help me get to double digits soon!
Len Penzo (@LenPenzo) January 11, 2021
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 (2.25 pages/visit)
2. Ontario (1.92)
3. Manitoba (1.85)
4. Saskatchewan (1.81)
5. Nunavut (1.67)
9. Alberta (1.48)
10. British Columbia (1.45)
11. Quebec (1.41)
12. Yukon (1.25)
13. New Brunswick (1.13)
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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
I’m not sure why, but this week I clearly struck a nerve with Mary Sue, who felt compelled to drop this little piece of advice into the Len Penzo dot Com complaint box:
Your blog costs money. Get rid of it because you’re clearly not qualified to give rational advice.
Actually, in the blogging world … being unqualified makes me over-qualified.
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