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 …
Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.
– Frederic Bastiat
Credits and Debits
Credit: Did you see this? According to a new survey, nearly 75% of workers report that they or a spouse have saved for retirement. Among workers, 27% said they have less than $25,000 in savings, excluding home equity — and one-third say they’re doing well financially, with $250,000 or more saved for their golden years. Hooray!
Credit: The same survey also found that 80% of retirees are “optimistic about their financial prospects” and three out of four US retirees and workers believe they’ll have enough cash for retirement, with 72% of workers saying they’re somewhat or very confident that they’ll be able to live comfortably in their golden years — that’s close to the survey’s all-time of 74% in 1993. “Comfortably,” huh? Obviously, they have more confidence in today’s currency of the realm than I do. Oh … and the supply chain:
Maybe off-shoring all those supply chains wasnt so smart after all.
A #1, Emperor of the North Pole (@railboss) April 28, 2021
Debit: Speaking of doing well, why does anyone still work in the stress-filled private sector when they can be an overpaid government employee? This is no more apparent than in Illinois where annual pay is: $115,000 for prison barbers; $123,000 for janitors; $174,000 and $222,278 for Chicago bus drivers and transit workers, respectively; and $418,677 for community college presidents. It’s also where 171 small town managers out-earned the governor ($181,670) last year. No, really.
Yep the corruption is blatantly thrust in our face because they know there’s nothing we can do about it. Gonna vote out the current guy? The next guy is even worse. Much of the public has its eyes wide shut on this matter.
Dave Kranzler (@InvResDynamics) April 29, 2021
Debit: In fact, Illinois public employees and retirees with $100,000+ paychecks grew from 109,881 in 2019 to an all-time high of 122,258 last year. The annual cost: nearly $16 billion — and that will only increase in the coming years. How can Illinois afford such lunacy? You can blame Congress’ recent $2 trillion ‘American Rescue Act’ — it sent $14 billion to Illinois state and local governments. Heh. Remember that the next time you turn in your Form 1040.
Achilles Financial (@FinanceAchilles) April 29, 2021
Credit: By the way, an updated analysis at OpenTheBooks.com shows that an Illinois family of four now owes more in unfunded pension liabilities ($98,000) than they earn in household income ($63,585). In a state of 13 million residents, every man, woman, and child owes $24,000 — on an estimated $317 billion pension liability. On second thought … now that every American is footing the bill for all of the fiscally irresponsible states, I guess those numbers are officially moot.
This is unsustainable. We’re spending less and less on things that actually improve #Illinois and, people are fleeing in droves. It’s time to stop kicking the can and summon the political courage to fix this. #SaveIllinois #twill#Ilgov #PensionReformhttps://t.co/0nY7qD9UBL
Matt Quigley (@mattquigley711) November 21, 2019
Debit: Of course, when it comes to overpaid government employees, Illinois is far from alone. For example, it’s no secret that the highest-paid Los Angeles County lifeguards earn up to $392,000 annually — and dozens of others rake in more than $200,000 a year. So it doesn’t take much imagination to figure out what other state and municipal workers in California are bringing home if the government lifeguards are earning that much. Obviously, it’s a great gig if you can get it …
Debit: Unfortunately, this game of robbing the taxpayers will continue — and only get worse — as long as the federal government keeps bailing out free-spending Big Government states such as Illinois, New York, California and Michigan. And why not? Congress and these bankrupt states have become partners in crime. Too bad it’s at the expense of all the small-government fiscally-conservative states. (Psst. Now it’s really time for everyone to get out of the pool …)
Nothing to see here, everything is ok… pic.twitter.com/sPzDscxyga
Jose Barrera (@Jose_M_Barrera) April 30, 2021
Credit: Meanwhile, the looting of the US Treasury to cover these expenditures continues. And the unfettered currency printing required to keep the game going has far-reaching consequences. So much so that financial commentator Jim Quinn observes, “There’s now a baseball card bubble frenzy on par with stocks, bonds, real estate, crypto, art, used cars, NFTs, and just about anything not tied down.” Yep. It’s just more proof that the money our fragile social fabric depends on to function has lost all meaning. Thanks Fed.
Powell keeps talking about the people they serve. The Fed is owned by the major banks. That is who they serve. They do not do what is best for “the people”.
Michael Lebowitz, CFA (@michaellebowitz) April 28, 2021
Raging? Just strip out food, energy, healthcare, housing and education. Then we’re doing ok.
Keith Dalrymple (@Jonathan_Keith2) April 28, 2021
Credit: The good news is the public at large has yet to figure out just how debauched the cash in their wallets and bank accounts truly is. Ironically, that ignorance is the primary factor that’s preserving whatever is left of the dollar’s rapidly dwindling purchasing power. Then again, there isn’t a carpenter in America who isn’t aware of what has happened to the greenback during the last ten months …
Debit: Now for the bad news: The thoroughly-debauched dollar is what we’re paid for our labor — and then use to buy the things we need for daily life. Unfortunately, we also use it to store our hard-earned retirement savings. Just don’t expect any changes to the rotting system until it completely collapses because it’s wildly profitable for both the politicians and the bankers. And if you don’t believe me, just ask this guy:
Debit: The plunging purchasing power of the dollars in your wallet is easier to see when viewing commodity prices, which rose sharply this week. Yes, again. In fact, for the year, more than half of all major commodity contracts have soared by 50% or higher — and that’s something that hasn’t happened in 50 years. And why is that? Well … while not a perfect answer, Sir Isaac Newton might point to his Third Law of Thermodynamics, which says that for every action, there is an equal but opposite reaction.
Richard Feynman the physicist said in 1965:
There are 10^11 stars in the galaxy. That used to be a huge number. But it’s only a hundred billion. It’s less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.
jstock37 (@jstock37) April 29, 2021
Credit: This week Alasdair Macleod illustrated just how broken markets are, as all commodities have surged since January — except gold and silver. Uh huh. Those metals are not only down, but they’re also the worst performers in 2021. The good news is, that also means wealth insurance is on sale. I realize that’s of no concern for those of you who believe the US dollar will remain the world’s premier reserve currency in the coming years … but I wasn’t talking to you.
A reset should mean a dollar devaluation. Just like Roosevelt’s New Deal in 1933
Biden will say: This is The Green New Deal (needed to solve the Climate Crisis)
A New Bretton Woods, to discuss a US Debt Restructuring, might be part of it ..
Willem Middelkoop (@wmiddelkoop) April 28, 2021
By the Numbers
The number of billionaires on Forbes’ 35th annual list of the world’s wealthiest people exploded to an unprecedented 2755 — that’s 660 more than last year. Here are the 10 richest, in reverse order:
$84,500,000,000 Mukesh Ambani (Primary wealth source: multiple)
$89,000,000,000 Surgey Brin (Google)
$91,500,000,000 Larry Page (Google)
$93,000,000,000 Larry Ellison (Oracle)
$96,000,000,000 Warren Buffett (Berkshire Hathaway)
$97,000,000,000 Mark Zuckerberg (Facebook)
$124,000,000,000 Bill Gates (Microsoft)
$150,000,000,000 Bernard Arnault (Louis Vuitton)
$151,000,000,000 Elon Musk (Tesla)
$177,000,000,000 Jeff Bezos (Amazon)
The Question of the Week
Last Week’s Poll Results
How much was your federal tax refund this year?
- I didn’t get a refund (55%)
- More than $1000 (26%)
- $1000 or less (16%)
- I don’t know yet (4%)
More than 2000 Len Penzo dot Com readers responded to last week’s question and it turns out that more than 3 in 5 either received a rebate from Uncle Sam of less than $1000 — or got nothing at all. For those of you wondering why the government bothers to tax us at all in light of its willingness to print as many US dollars as it needs to satisfy its every need, the answer can be summed up in one word: power. More specifically, politicians use tax policy to gain more power (and contributions) by offering tax breaks to their friends — and threatening higher taxes on their opponents. Then again, if the US Constitution was followed to the letter, that little game wouldn’t be quite so effective as it is today — or as it has been for the last century.
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: Social Work
A husband and wife who worked for the circus went to an adoption agency, but the social worker raised questions about their suitability. So the couple produced photos of their 50-foot motor home, which was clean, well-maintained and equipped with a beautiful nursery.
Not convinced, the social worker then raised concerns about the education a child would receive while in the couple’s care.
The husband responded, “We’ve arranged for a full-time tutor who will teach the child all the usual subjects along with French, Mandarin, and computer skills.”
The social worker solemnly nodded her head in apparent approval — but then she proceeded to express concerns about a child being raised in a circus environment.
The wife tried to allay the social worker’s trepidation. “Our nanny is a certified expert in pediatric care, welfare, and diet,” she explained.
Upon hearing that, the social worker was finally satisfied. She then asked, “What age child are you hoping to adopt?”
“It doesn’t really matter,” replied the husband, “as long as the kid fits in the cannon.”
(h/t: Antonio Fortunato)
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
Imagine my surprise when Melinda left this apparent, well … let’s call it “fan mail” in my email inbox:
Len, the cure for my loneliness is in your pants!
Really? Three pennies, two nickels, a Swiss army knife and some lint?
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