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.
Let’s get right to this week’s commentary …
War is peace. Freedom is slavery. Ignorance is strength.
— George Orwell
Government is at its worst when you have apathy from its citizens.
— Jesse Ventura
Credits and Debits
Debit: Did you see this? With the Fed denying the rapid price increases occurring all around us, consumers living in the real world are finding higher prices at the gas pump and supermarket to be unavoidable. In fact, a recent survey of more than 2600 respondents found that 77% were somewhat concerned about inflation. Now if only they’d start showing some concern for the imminent demise of the entire monetary system.
just need to update those hedonic adjustments
tim nutt (@twnutt) March 31, 2021
Debit: Much of the inflation concerns were based on younger respondents. About 52% of respondents aged 18-24 were “very concerned” about inflation, as were 50% of those from 25 to 34 and 48% of people between the age of 35 and 54. Surprisingly, only 37% of those older than 54 were concerned about inflation. Well … so much for getting wiser as you grow older.
Credit: Then again, it’s not just the older folks who seem to be lost in the wilderness. As one astute commenter at Zero Hedge noted, young adults “are the most worried about inflation, yet they’re the biggest proponents of forgiving student loans, the Green New Deal, and universal healthcare — so they think the printing press is solving the inflation problem.” It’s not surprising; the Mickey Mouse Club gave way to the Free Lunch Club long ago. Oh … and speaking of free lunches …
Debit: In the meantime, inflation is only going to get worse before it gets better, as a group of 17 well-known food companies recently announced their inflation concerns. In other words, expect higher grocery bills as they pass along inflationary costs they’re blaming on a combination of high transportation and COVID-protocol costs. Actually, the real reason is too many dollars being printed … but message received.
Try 33% for my beloved Corn Chex https://t.co/xbiRdJxIPq
Brinkman Family Office (@BrinkmanFamily) April 1, 2021
Debit: So how did we get to this point? Blame the education system. Today people equate cash with wealth. But earning money in exchange for producing goods is far different than the government printing dollar bills and giving them out; somewhere down the road, most people have forgotten that. Unfortunately for most people, relearning that basic economic truth will eventually end up being a catastrophically expensive lesson.
Credit: But, as Peter Schiff warned this week, “with government and Fed intervention, we have millions of unemployed people sitting at home just getting a check from the government. They don’t produce anything; they add no goods or services to the economy. Yet, they can consume goods and services in the same proportions as productive members of society. What does this do? It raises prices.” Imagine that.
Its a lot easier to win a class war if the other side doesnt know there is one.
Brixton77 (@Brixton771) March 31, 2021
Debit: Of course, inflation isn’t a big concern for the upper class because they typically consume a relatively small percentage of their wealth. On the other hand, the poor tend to spend their entire paychecks as soon as they get them and inflation negatively impacts their purchasing power.
Credit: As investment analyst Michael Liebowitz notes, “Other than small retirement plan savings, in some cases, the poor receive little to no benefit from rising asset prices — but they do pay for inflation. Thoughtless monetary policy is sold to the public in the name of the greater good. What these purveyors of deceit fail to expand on is whose greater good.” Yep. And I’m sure they learned everything they know from this guy:
Debit: By the way, a decade of ‘thoughtless monetary policy’ has put us in the unenviable situation where this year’s projected US federal deficit will exceed the entire M2 currency supply in 2004. Think about that for just a second — then think about how much more monetary heroin needs to be injected into the system in a desperate attempt to keep it alive from here on out. Heck … if the system was a horse, it would have been euthanized long ago.
We’ve been talking about infrastructure for at least 8 years here.
$18+ trillion more in debt now and not even a Hoover Dam to show for it. https://t.co/A5Mt0P20O7
Rudy Havenstein, Probably Art. (@RudyHavenstein) March 30, 2021
Run for Congress so you yourself can siphon from the great fraudulent teat.
Uneducated Investor (@uneducated_inv) April 1, 2021
Credit: Last week financial analyst Michael Every made this head-turning prediction: “The Fed is gonna need a bigger boat. And we know what that boat is: the ability to say $3000 is now $10,000 with the stroke of script-writer’s pen — and without yields rising in tandem.” For those not paying attention, that’s called a currency devaluation, and it represents a haircut in your purchasing power — as well as your retirement savings.
Credit: This week, financial analyst Jim Reid observed that “inflation is a choice in a fiat-money world; the question is whether politicians choose it or not.” Well … they made their choice. And as Zero Hedge notes, they’re just “hoping to get away with it for as long as possible while (pretending) inflation is a Russian conspiracy theory while boosting incomes for as long as they can before the tsunami of soaring prices washes everything away.” Thankfully, there’s still time to run for high ground.
American politicians only care about two things:
1) Get elected.
2) Get re-elected.David Anon (@DavidAnon8) March 25, 2021
The Question of the Week
[poll id="366"]
Last Week’s Poll Results
Which price target for bitcoin is more likely to happen first?
- It’s a toss up (53%)
- $30,000 (40%)
- $100,000 (6%)
More than 2000 Len Penzo dot Com readers responded to last week’s question and it turns out that more than than half of them have absolutely no idea where the bitcoin price is headed from here. I feel the same way. That being said, it’s a speculator’s paradise. If you’re going to dip your toe in the water, be prepared for all eventualities. Most importantly: Don’t fool yourself into thinking you’re buying a proven store of value, because it definitely isn’t.
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.
By the Numbers
With Powerball and MegaMillions the US arguably has two of the most popular lotteries in the world. Here are the ten states with the most combined winners:
20 Pennsylvania
22 Michigan
22 Minnesota
23 Georgia
23 Ohio
31 New Jersey
33 Missouri
37 New York
41 California
41 Indiana
Source: Lottery ‘N’ Go
Useless News: History Lesson
In 1923, who was:
1. President of the largest steel company?
2. President of the largest gas company?
3. President of the New York Stock Exchange?
4. Greatest wheat speculator?
5. President of the Bank of International Settlement?
6. Great Bear of Wall Street?
These men were considered some of the world’s most successful of their day. Now, 98 years later, the history book asks us, if we know what ultimately became of them.
The Answers:
1. The president of the largest steel company. Charles Schwab, died a pauper.
2. The president of the largest gas company, Edward Hopson, went insane
3. The president of the NYSE, Richard Whitney, was released from prisonto die at home.
4. The greatest wheat speculator, Arthur Cooger, died abroad, penniless.
5. The president of the Bank of International Settlement, shot himself.
6. The Great Bear of Wall Street, Jesse Livermore, also committed suicide.
However: In that same year, 1923, the PGA Champion and the winner of the most important golf tournament, the US Open, was Gene Sarazen.
What became of him?
He played golf until he was 92 and died in 1999 at the age of 95. He was financially secure at the time of his death.
The Moral:Screw work.Play golf!
(h/t: Sam I Am)
More Useless News
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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
Lea left me a note this week complaining about some poor customer service she recently received:
I spoke to three different managers and each one said, ‘I’m sorry there is nothing I can do for you.’
Yep. Now you know why they’re managers.
If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message.
Photo Credit: public domain
Hi Len,
Thanks for another great cuppa to start my weekend!
It seems like the politicians have lost whatever shreds of fiscal restraint (ha ha ha!) they might of had. They’ve seen all the printing so far hasn’t caused hyperinflation and so I guess they figure it never will.
Sara
They are definitely pushing the envelope, Sara. We used to deal in billions. Now it’s trillions — and it won’t be long before we are talking about quadrillions.
“The Fed is gonna need a bigger boat. And we know what that boat is: the ability to say $3000 is now $10,000 with the stroke of script-writer’s pen.”
Scary. I think that will get the public’s attention.
You better believe it. And I think it will be the ONLY thing that will make most people wake up.
“Surprisingly, only 37% of those older than 54 were concerned about inflation. Well … so much for getting wiser as you grow older.”
Len, a possible explanation for some of us oldsters is that we have experienced it before and are prepared for it. REAL savings (stored food, with housing and other hard assets long since paid for, savings in PMs. land. etc. with no need to acquire more.
Same thought hit me RD. Not that I’m totally unconcerned, but have worked hard to minimize the effects of something I can’t control by improving things I can control.
Unfortunately, Dave, I think you are among a very small minority in that regard.
I read that the infrastructure bill includes an increase in corporate taxes that will reduce earnings by 9%. It’s not just corporations that will take the hit. It will be savers and investors too. My 2 cents.
Corporations won’t be taking any hit; they’ll pass any tax increases on to the consumer. Frankly, it’s amazing how many people out there can’t seem to grasp that simple fact. But whatever … enjoy the higher price tags, folks.
Here’s how the government accurately calculate inflation. When a category goes up in price they call it ‘volatile’ and exclude it from CPI. But when a different category goes down they call it a ‘headline number’ and weight it heavily.
One of the biggest jokes on the planet is the government’s primary inflation gauge (the CPI) excludes two of the most important items we all depend on daily: food and energy.
The Fed knows what they’re doing. Their adoption of a the 2% inflation target, which hasn’t been reached yet, is the result of decades of experience with fiat-money.
Is this a joke? The Fed may know what they’re doing, but they don’t have the public’s best interest in mind when they are making their monetary policy decisions. Every decision they make is based one objective: maximizing ill-gotten profits for their private-member banks. Otherwise, why on earth would anyone think an annual 2% inflation rate is good — especially when you realize that it results in reducing the dollar’s purchasing power by roughly 50% every 30 years? If they were looking out for the people’s best interest they would be gunning for a 2% DEFLATION rate every year — that would DOUBLE the dollar’s purchasing power every 30 years.
It wasn’t a joke. I am completely serious.
So you’re okay with the dollars you save losing half their purchasing power every 30 years — and that’s if you believe annual inflation is only running at 2% (which it isn’t)? Considering that inflation has been running near 10% for about decade now, the dollars you saved in 2011 have already lost half their value — and then some. (Any idea who that lost purchasing power was transferred to in the process?)
Then again, I guess that ain’t so bad as long as your investments have been averaging 10% returns every year … just to tread water.
Where would we be without those altruistic boys (and girls) at the Fed!
The question of the week doesn’t cover every solution. If you could get rid of the graft in NJ, NY and CT you would not need to raise the gas taxes. It costs $40,000. to pave a one mile long road in Alabama up to code. To build the IDENTICAL one mile long road in NY, NJ or CT is $1,000,000. because of all the union graft which is then partially funneled into the campaign coffers of our Democrat politicians who then allow the unions to build roads with 10 times the men needed, inflated prices for materials and all the other rake offs. What is irritating is that the people who voted Democrat for this fiasco in our northern states (By voting Democrat they also voted for the occupied cities, the arson, the homelessness including defecating and urinating in the streets, the squeegee men, the rising violent crime rates in the cities, the anti police movement.) are moving SOUTH into previously well managed states and VOTING DEMOCRAT FOR THE HIGH TAXESS AND SOCIAL DESTRUCTION WHICH THEY ARE FLEEING! Talk about stupidity.
I can’t answer your “question of the week” today. I don’t believe there were enough choices. There were taxes already built into the various taxes for the roads. The problem is that they have been shifted + allocated for other useless things, and now the powers that be want more to replace what was repurposed!!!
My father-in-law said the same thing, Paul. I probably should have thought the question through a bit better before posting it.