Len Penzo dot Com

The offbeat personal finance blog for responsible people.

Black Coffee: Quoth the Raven

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 …

Some battles are won with swords and spears; others with quills and ravens.

— George R.R. Martin

Credits and Debits

Debit: Did you see this? Nearly four million people quit their jobs in April, which is almost double the number of employees who quit a year earlier. Among private-sector workers, this April 2.8% told their boss to take his job and shove it — that’s a full percentage point more than last April, when the so-called “quits rate” fell to a seven-year low. As for those who are still happily employed …

Debit: Perhaps not coincidentally, the number of job openings soared by a record 1 million to 9.3 million in April — that’s the highest number of open positions in the history of US jobs data. In fact, thanks to generous government unemployment benefits, so few people are now incentivized to work that there were just 1.06 unemployed workers for every job opening last month — that’s down from 1.35 in February and from 4.6 at the peak crisis moment last April. That’s also great news for this recently unemployed magician:

Debit: Then again, why would anybody work when they become an overnight stock market millionaire! Just be aware that a growing number of financial analysts say there are multiple warning signs of a coming correction — somewhere in the vicinity of (gasp!) 5% to 10%. Although … with the Fed’s printers stuck on overdrive, what used to be considered a relatively reasonable forecast now seems like a completely off-the-wall prediction.

Debit: Meanwhile, US Treasury Secretary, Janet Yellen, said this week that even though inflation is now at the highest level since Paul Volcker hiked rates to 20%, and the US is about to issue another $3 trillion or so in debt just to fund existing stimulus programs, the US should push forward with its $4 trillion spending plan. Yes; even if it triggers persistent inflation and higher interest rates. No, really; she actually said that.

Debit: Of course, Ms. Yellen tried to justify her ludicrous opinion with this line of absurd reasoning: “We’ve been fighting inflation that’s too low for a decade.” What? Silly me; I thought debauching our currency was a bad thing. The hopelessly out-of-touch ivory-tower economist then went on to opine that, higher inflation “would actually be a plus for society.” Yes; because the public absolutely craves declining purchasing power.

Debit: By the way, it was mentioned here last week that negative real rates are rocket fuel for gold — as they should be. So … just how negative are real interest rates at the moment? Well … with the 1-year Treasury yield at 0.5%, and the the latest grossly-understated CPI annualized at 6.5%, that means real rates are negative 6.0% — and getting more negative with each passing day. The last time real rates were this negative was 1980 when, according to Shadow Stats, gold was selling for an inflation-adjusted price of more than $10,000. So you’d think the yellow metal has some catching up to do.

The real interest rate is in blue; the nominal 1-yr Treasury bill rate is in black; and the “official” (read: under-stated) inflation rate is red. Biello’s figure of negative 4.9% (see tweet, below) is based on the 10-year Treasury bond yield.

Credit: Despite the latest CPI data for May showing price inflation is only getting worse, both stock and bond prices continue to soar higher; blithely ignoring all of the macro- and micro-economic fundamentals. Surprised? You shouldn’t be. If there’s a silver lining to all of this insanity, I guess people can always check their latest 401(k) statements. That is … if they have one.

Credit: In other news, this week financial reporter Pam Martenson pointed out that, “for reasons that have yet to be explained, when it comes to the $1.7 trillion cryptocurrency market — which is effectively a con-game based on the greater fool theory — nothing is regulated. Not the cryptocurrencies; not the promoters; not the exchanges; and not the firms that are providing as much as 100 times leverage to fuel this ‘rat poison squared,’ as Warren Buffett characterized bitcoin.” Okay. Then this begs a simple question: Why not?

Debit: Martenson concluded her report by noting that, “the US now has the dubious distinction of being the capital of innovation for every conceivable type of fraud surrounding cryptocurrencies — a ‘currency’ backed by nothing and regulated by no one.” Preach it, sister. Maybe the hodlers should take a lesson from these guys on how to challenge dubious huckster claims with some probing questions of their own:

Debit: Speaking of con games, the US National Debt is now so big, each taxpayer owes more than $225,000. Keep in mind this doesn’t include all of the unfunded liabilities like Social Security, Medicare and other government promises; if you include those, the number jumps to more than $1.2 million per taxpayer. The only thing keeping this monetary charade alive is the dollar’s continuing role as the world’s premier reserve currency.

Debit: As the dollar continues its death march into the hyperinflationary abyss, most Americans’ living standards — which have been artificially propped up for more than 40 years now — are going to fall and life is going to change for all of us because the wealth they thought they had will be proven to be a lie. The good news is, after the reckoning, living standards can quickly recover — as long as a new monetary system is introduced that ties the national currency to gold.

Debit: Until then, almost everyone in Congress will remain oblivious to the fact that, in so many ways, they’re the ultimate reason why we’re stuck with the current fraudulent dying debt-based monetary system we do have — not the “wealthy tax cheats;” not the small businesses and corporations who risk their own capital to raise everybody’s standard of living; and not the people who are accused of failing to pay their “fair share.”

Credit: One last thing: Financial analyst, Bill Holter, notes that as the reckoning approaches, you’ll see that goods become scarce and dollars become hard to spend. He also warns that the failing dollar is going to feed on itself because “human nature is that when people can’t have something, they want it even more.” Uh huh. In other words, the best time to protect yourself is now — while you still can. I know; I keep repeating myself. But at least I’m not the only one.

By the Numbers

The world’s 50 highest-paid athletes collected $2.8 billion over the 12 months ending May 1. But this year’s list features many more notable numbers:

0 The number of athletes appearing on the list from Major League Baseball, the NHL or Nascar.

4 The number of athletes who surpassed $100 million in total earnings this year. (Conor McGregor, Lionel Messi, Cristiano Ronaldo, Dak Prescott)

8 The number of sports represented on the list, led by football with 18 athletes. Soccer (8), tennis (4), golf (3), Formula 1 auto racing (2), boxing (1) and mixed martial arts (1) rounded out the list.

16 The number of nationalities represented on the list. Other than the US, which has 34 athletes ranked, the only country to have more than one athlete is France. (Kylian Mbappe and Paul Pogba)

31 The average age of the 50 athletes on this year’s list. Phil Mickelson (50), Tiger Woods (45) and Tom Brady (43) are the only athletes over 40 on the list.

$34,000,000 The cutoff to make this year’s ranking, beating the previous high of $31.7 million from 2019; it’s also a 55% increase in ten years.

$60,000,000 Tennis star, Naomi Osaka’s, 12-month earnings — that’s the highest total ever for a female athlete.

$1,040,000,000 The amount this year’s top 50 collected in off-the-field earnings from their endorsements and business activities.

Source: Forbes

The Question of the Week

[poll id=”376″]

Last Week’s Poll Result

Where do you get your most important info?

  • News aggregation websites (24%)
  • Print or online newspapers (21%)
  • Blogs (17%)
  • Radio or podcasts (15%)
  • Television (13%)
  • Social media (6%)
  • Spouse or significant other (3%)

More than 2100 Len Penzo dot Com readers responded to last week’s question and the results verify that television has very little influence on where people get their most important information today; in fact, only slightly more than 1 in 8 people say they get at least some of their most important info from the boob tube.

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: Prescription Fill

This lady noticed that her dog could hardly hear so she took it to the veterinarian. He determined that the dog’s problem was hair in its ears. So he cleaned both ears and the dog could hear fine.

The vet then proceeded to tell the lady that if she wanted to keep this from recurring she should go to the store and get some hair remover, and then gently rub it in the dog’s ears once a month.

After receiving the vet’s instructions, the lady went to the drug store to get some hair remover.

At the register the pharmacist says, “If you’re going to use this under your arms don’t use deodorant for two days.”

“I’m not using it under my arms,” said the lady.

“Well … if you’re using it on your legs, don’t shave for five days.”

“I’m not using it on my legs either,” the lady said. “If you really must know, I’m using it on my schnauzer …”

The pharmacist replied, “Then be sure to stay off your bicycle for at least a week.”

(h/t: Agau)

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 (2.38 pages/visit) !
2. New Hampshire (1.94)
3. North Dakota (1.86)
4. Idaho (1.81)
5. Maine (1.80)

46. Vermont (1.15)
47. Virginia (1.13)
48. Montana (1.12)
49. Wyoming (1.10)
50. Hawaii (1.02)

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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

This week Motzmotz submitted this grievance to the Len Penzo dot Com Complaint Department:

No one reply to the comment I leave here, and possibly nobody care the comment I leaved. [sic]

Not true. Anyone who leaved a comment can rest assured that I readed it.

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,

    Can you feel it? Silver feels like it is going to explode soon. It’s so obvious the banks are doing everything they can to keep it under $28. They’re losing their grip though!

    Sara

    • 2

      Len Penzo says

      I’ve got the same feeling, Sara.

  2. 3

    Cowpoke says

    Getting tax cheats? Good. Recommend these senators and representatives should start by looking at themselves. It’s a good story but you know almost all of the extra IRS auditors they want to hire are going to be turned on us middle class taxpayers.

    • 4

      Steve T says

      This. ^^^^^^^^^^^^^^^^

    • 5

      Len Penzo says

      Of course, Cowpoke. The powers-that-be are working hard to destroy the middle class. Consider this proposal another step in that direction.

  3. 6

    RD Blakeslee says

    Rudy Havenstein, buzzword buzzword buzzword meme.
    @RudyHavenstein
    On the bright side, if you exclude everything you pay for, the cost of living is flat.

    Actually, this ostensibly absurd situation can really be approximated in one’s personal life,lasting at least a number of years: Own your wealth pre-paid, as far as is reasonable. Debt-free ownership of a store of food, car, house and major appliances, live in the country with your own water supply and household space heating fuel source (firewood).
    Etc. (Very important! I could expand this list to one as long as your arm!

    AND! It need not be all that austere, either:
    https://lenpenzo.com/blog/id22017-how-i-live-on-less-than-40000-annually-ralph-from-west-virginia.html

    • 7

      Len Penzo says

      You’ve certainly set an excellent example for us, Dave. (Tennessee Andy is another one who has managed to do the same thing.)

  4. 8

    Madison says

    The housing market is so crazy. Prices just keeping going up and up. I feel like I’ll never be able to buy my own home. Please tell me I’m wrong. I need a little happy news.

    • 9

      Len Penzo says

      This too shall pass, Madison. Affordability will return; I’m afraid you are going to have to be patient though.

  5. 10

    BC says

    Can you share your thoughts on negative real rates and the FIRE movement? Can they coexist? The two seem like oil and water.

    • 11

      Len Penzo says

      Well … I will say this: Negative real rates certainly makes FIRE (financial independence retire early) harder to pull off. At least it does for those who are already in the “RE” part of FIRE.

      The ability to remain truly retired and financially independent becomes increasingly compromised the younger one’s official early-retirement kicks into gear, no matter what real interest rates are; but that’s especially true with negative real rates — at least for those who didn’t bother to insure any of their wealth (which I’m going to assume amounts to 99% of those in that movement).

      Thanks for that question, BC! I had never really thought about that.

  7. 13

    Tom says

    I’ve seen several charts that show right before hyperinflation happens prices drop a bit (so people get fooled) then the final explosion happens.

  8. 14

    James Smith says

    Not only in the U.S., but also in Canada there has been a wave of layoffs. It may not have been much publicized on television or in the newspapers, but it was there. I know one personal example: at my small company an employee made a huge profit on the stock market. And left. And why would he continue working for little money if he became a millionaire? So yes, the article correctly says that the stock market can make you a millionaire, but it can also ruin you – you have to remember that.