Len Penzo dot Com

The offbeat personal finance blog for responsible people.

Black Coffee: Uncle Sugar and the Booby Twins

By

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.

I hope everybody had an enjoyable week. Without further ado, let’s get right to this week’s commentary …

Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, and debt is the money of slaves.

— Norm Franz

The government is like a bunch of cockroaches. They don’t bother you so much by what they steal and carry off as they do by what they fall into and foul up.

— Anonymous

Credits and Debits

Debit: Did you see this? Although it originated as a joke, this week Dogecoin became one of the five biggest cryptocurrencies based on its market capitalization. And lest you have any doubts that Dogecoin’s ascendance is proof positive that cryptocurrencies have finally jumped the shark, this officially seals the deal:

Debit: In other news, Bank of America noted that mentions of “inflation” during quarterly company earnings calls with the media have jumped 800% year-over-year. Their conclusion? “On an absolute basis, it points to, at the very least, ‘transitory’ hyperinflation ahead.” Hey … that’s their words; not mine. By the way, like a house fire, hyperinflation is always transitory. The only difference is the fuel — one is wood; the other is purchasing power. And when it’s gone … it’s gone.

Credit: Inflation slowly works its way into the financial system in distinct phases; before showing up at the retail level it affects raw materials, followed by factory gate prices. And as the Gains, Pains & Capital blog points out, with the price of raw materials such as copper, lumber and even gasoline all up triple digits in the last 12 months, we entered the final retail-price inflation phase a few months ago.

The year-over-year price increases for copper (black); lumber (blue); gasoline (red).

Debit: And while that inflationary news was alarming, its even more alarming when you realize the punchline: The last time the Chicago PMI price index was this high was way back in 1980 — that’s when the Fed Funds rate was 22% in a desperate attempt to put the runaway-inflation genie back in its bottle. Curiously, the Fed can’t seem to see any inflation today. Strange, isn’t it? It’s almost as if there’s a very important reason why they don’t want to see it.

Debit: Maybe this has something to do with the Fed’s willful blindness: Uncle Sam is now responsible for 34% of Americans’ income. Putting that in perspective, six decades ago transfer payments were 7%. Then, shortly after Nixon closed the gold window in 1971, they climbed into the low teens. The number jumped again after the Great Financial Crisis of 2008, spiking to nearly 20%. And now government transfer payments are officially off the chart. I’m sure there’s a good reason for this. Oh, wait …

Debit: For those who still haven’t figured it out, with the Fed subsidizing the top 1%, and the government providing more support than ever to the lower class, it’s the rapidly disappearing middle-class who get stuck paying the bills — so bend over, folks. In fact, with barely half of America consisting of middle-income households now, its social strata is no better than many banana republics — and sadly, the pressure on the middle class is only going to get worse until the fiat dollar expires. Don’t believe me? Just ask Janet …

Debit: Speaking of paying the bills, somebody should tell Secretary Yellen that US tax revenue has increased six-fold since 1980; that’s not a revenue problem. The trouble is that America’s debt has gone up 31 times. Try running your household like that. On second thought, if earning income by printing counterfeit currency was actually legal for us private citizens, I’d probably definitely use that strategy too. After all, it sure beats earning a living by the sweat of your brow — especially on days like this:

Credit: Unfortunately, macroeconomist Alasdair Macleod warns that the central bankers and politicians have, not surprisingly, “turned a blind eye to the effects of monetary expansion. While the government and banks benefit from the seigniorage of money and credit, the losers are the economic producers, retirees, and the lowest-paid, all of which lose through debasement of profits, incomes and capital.” Imagine that.

Credit: This week Peter Schiff echoed essentially the same sentiments, saying that although “higher interest rates are appropriate — and they are — they’re not going to happen because they’re not appropriate for maintaining the bubble economy. And the bubble economy is all we’ve got.” Well … we’ve also got titscoin now, so there’s that.

Credit: Macroeconomist Daniel Lacalle points out that, “Governments always justify printing more money with the excuse that there’s no inflation. When inflation rises, they say it’s transitory. And when inflation soars, they blame businesses and shop owners, presenting themselves as the solution with ‘price controls.” Yep. Although everybody who understands macroeconomics knows that price controls only lead to massive shortages. Meanwhile, we have breaking news (that’s perfectly on cue) …

Debit: Lacalle sums up the situation thusly: “Central banks are unable to normalize policy because they’re hostage to governments that simply refuse to reduce deficit spending.” Likewise, as long as workers continue being paid in IOUs masquerading as money, most people looking for a reliable long-term store of value will continue to be held hostage by their government — at least those who aren’t aware of alternatives like this:

Credit: Remember … there’s a very good reason why silver is known as a precious metal. Consider that there are 25,000 tons of silver mined annually around the world. Now compare that to the 22 million tons of copper mined last year. Based on current prices, the market — and the bankers — want you to believe that although copper is nearly 1000 times more plentiful than silver, the white metal is only six times more valuable. Huh? Rest assured, when our fraudulent dying monetary system finally kicks the bucket, that absurd misconception will be immediately corrected.

By the Numbers

Now that we’re into May, here is an overview of the returns for select assets (rounded to the nearest percentage point) during the month of April. Nope … no inflation here:

2% Dow Jones Industrials

4% Gold

6% S&P 500

6% Nasdaq

6% Oil (Brent)

6% Silver

12% Copper

21% Wheat

32% Corn

48% Lumber

Sources: Zero Hedge; Investing.com

The Question of the Week

[poll id=”371″]

Last Week’s Poll Result

Which of these minimum annual incomes would you need to be truly happy?

  • $60,000 (28%)
  • $90,000 (27%)
  • $200,000 or higher (16%)
  • $150,000 (13%)
  • $30,000 or less (9%)
  • $120,000 (8%)

More than 2100 Len Penzo dot Com readers responded to last week’s question and it turns out that slightly more than third of them say they could lead a happy life with an income of $60,000. On the other hand, I was somewhat surprised to see that 1 in 6 people believe true happiness isn’t possible without an income of at least $200,000 — if not more. Wow! I guess they have expensive tastes.

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: Merger Announcement

NEW YORK, (AP) — In a move that rocked Wall Street today, Bert and Ernie announced that they have merged to form Bernie, a giant conglomeration of felt that will move them into the Number 2 spot, ahead of Big Bird and just behind Barney.

In recent years the two had lost sponsorship from the letter P and the number 5; analysts say the merger will help improve their market share.

“This is a logical move for us,” Bert said. “‘Share’ is our favorite word.”

(h/t: Barbara)

More Useless News

Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:

1. West Virginia (4.61 pages/visit) !!!! (a new all-time record)
2. South Dakota (2.26) !
3. North Dakota (1.76)
4. New Hampshire (1.67)
5. Indiana (1.65)

46. Mississippi (1.09)
47. Wyoming (1.08)
48. Hawaii (1.05)
49. Montana (1.04)
50. Rhode Island (1.02)

Whether you happen to enjoy what you’re reading (like RD Blakeslee and the rest of my really good friends in West Virginia) — or not (ahem, Rhode Island) — please don’t forget to:

1. Click on that Like button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!

2. Make sure you follow me on my new favorite quick-chat site, Gab — oh yeah, and Parler too! Of course, you can always follow me on Twitter. Just be careful what you say there.

3. Subscribe via email too!

And last, but not least …

4. Please support this website by patronizing my sponsors!

Thank you!!!! 😊

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

After reading my post on how to find a pest control company that won’t rip you off, Jeff Madison left this comment:

My wife and I have a terrible ant problem in our home, so maybe we should find someone who is licensed.

You should if you want me to invite you to my next picnic.

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

Comments

  1. 1

    Sara King says

    Hi Len,

    I’m with you. The government doesn’t have a revenue problem. It has a spending problem! But good luck asking it to reduce its workforce or cut back on spending.

    Have a great weekend!

    Sara

    • 2

      Len Penzo says

      Thanks, Sara!

  2. 3

    Cowpoke says

    That tweet by Janet Yellen takes my breath away. Where do I begin? Does she really believe the tripe she’s spewing? Are we living on the same planet? Goebbels would be proud, that’s for sure.

    • 4

      Jerry says

      Yellen: “One day somebody will write a book …” Looks like she just started writing her own book. I’ll be looking for it in the FICTION section.

    • 5

      Len Penzo says

      I’m not sure what is going on anymore, Cowpoke. It seems like everything we’re being fed by government and its loyal communications arm (better known as the mainstream media) are altered versions of the truth at best, or fantastical abject lies at worst.

      • 6

        Duane says

        Right on Len, you nailed it!

  3. 7

    Sam I Am says

    You know what has me the most concerned about food inflation? Corn and wheat prices are going through the roof, but I haven’t heard of any drought conditions in the plains states where these are grown. That tells me the price rise is all due to money printing and not fear of shortages.

    Think how high prices would be if there was a shortage.

    • 8

      Len Penzo says

      Great point, Sam.

  4. 9

    RD Blakeslee says

    “…debasing a currency (has) … been tried and failed every time.”
    – Robert Stoll.

    We tend to forget, if we ever knew, the detailed, morbid history of the human debasement this phenomenon has produced.

    E.g: (It’s depressing reading, but I think its worthwhile):
    “Fiat Money Inflation in France” – Andrew Dickson White, 1912

    • 10

      Len Penzo says

      I don’t think most people know the story of the issuance of assignats — fiat currency — during the French Revolution. It is an intriguing testimony of why — and how — fiat currencies always fail.

      In fact, the proposals and fiscal decisions we see being discussed and made by our government today are almost a perfect carbon copy of what went on during the late stages of the French Revolution, when the assignat was in its death throes. Does that portend a similar fate for the US dollar? That’s for you to decide.

      To his credit, Napoleon understood that fiat currency was the problem and restored order to France via the reinstitution of the gold standard.

  5. 11

    Susan says

    Len, I think you’ve been taken. Titscoin has to be a joke.

    • 12

      Len Penzo says

      Nope … not a joke, Susan; titscoin, like dogecoin, potcoin and others, are probably best described as pump-and-dump schemes. A good article on that can be found here.

  6. 13

    Paul says

    How much longer do you think it will take for silver to reach $50 again like it did in 1980?

    • 14

      Len Penzo says

      Beats me. But if I had to guess, I’m going to go out on a limb and say within the next 12 months.

  7. 15

    Joe says

    So Len, let’s say fiat currency collapses and hyper inflation is here, r u saying I’ll be able to walk into my local coffee shop that now charges $100 for a cup of coffee and literally put down a pre 1965 dime and they’ll give me a cup of coffee?

    • 16

      Len Penzo says

      You got it, Joe. That’s exactly what I’m saying. 😀

  8. 17

    Kenny says

    Looking at this week’s poll it looks like 4% of your readers work for the Fed.

    • 18

      Len Penzo says

      You may be right, Kenny. Either that or they are fabulously wealthy! Oh wait, Most people who work at the Fed are probably fabulously wealthy too … have you seen their speaking fees?