Black Coffee: A Junk Food Economy

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 a wonderful week. And with that, let’s get right to this week’s commentary, shall we?

Americans need to worry about the value of their currency as much as they worry about the value of their investments.

— Ray Dalio

Believe it or not, Twinkies have an expiration date. Someday very soon, life’s little Twinkie gauge is going to go empty.

— Zombieland

Credits and Debits

Debit: Did you see this? The S&P 500 has rallied 100% from its March 2020 COVID low of 2237. In fact, it took the market just 354 trading days to get there, which makes that the fastest bull-market doubling since World War II — as it should. Not only is inflation tame, but we’re also in the middle of a historic economic boom that was unleashed after small businesses across America were forced out of business by government officials.

Credit: Considering that, on a historical basis, bull markets typically take a minimum of several years to double from previous bottoms, this stock market rally has been impressive. But as financial analyst Lance Roberts points out, “the rally from the pandemic lows is less about the ‘economic recovery’ and more about $120 billion a month of Fed liquidity.” No surprise there. See for yourself:

Credit: For the record, there have been about 160 trading days in 2021 and on Friday the S&P registered its 52nd all-time daily high this year. Incredible. But as macro analyst Matthew Piepenburg points out, although the stock market continues to soar, “(US) consumer confidence recently saw the seventh greatest collapse in history — (so) who needs capitalism when central bank money printers determine prices?” Good point. In fact, I’d say it’s as useless as a parrot with a cell phone. Oh, wait …

Debit: Of course, a real ‘recovery’ requires organic growth, not the empty economic calories and currency debasement that comes with unfettered money printing. Those empty calories are apparent when you consider that, over the last fifteen years, debt has grown at seven times the rate of tax receipts and nearly five times more than economic growth. For those who prefer pictures, here ya go:

Credit: Then again, market analyst Michael Every notes that if “the Fed tapers QE, markets (could) tank; then it would have to quickly reverse policy ‘because markets’ — but then everyone will see that central banking is just a clown show and that QE and asset inflation is all they have.” One can hope; but it’s doubtful. Ironically, most people are too focused on the “news” coming from their “smart” phones to notice. Oh … and speaking of inflation:

Credit: Meanwhile, macroeconomist Alasdair Macleod is warning that, “a significant bear market in financial asset values is likely to take down the US dollar with it.” Heh. I know what you’re thinking, folks: When it comes to wild animal sightings on Wall Street, you have a much better chance of finding bigfoot than spotting a bear. Here’s why:

Debit: By the way, when the ‘Everything Bubble’ finally does burst, the purchasing power of the US dollar — and all of the other fiat currencies — will take their final nose dive into the abyss because, as Macleod informs us, “the central banks’ attempts to stop bank credit and deposits liquidating into a black hole of currency destruction can only accelerate.” In other words:

Credit: Of course, as macroeconomist Kristoffer Hansen notes, because the US dollar is the premier global reserve currency, “Americans can buy goods from the rest of the world without offering anything real in return. So they don’t have to produce; they can simply borrow.” And while this partly explains Americans’ high living standard, Hansen rightly notes that the best benefits “accrue principally to the financial and political elites at the center of the system.” Imagine that.

Credit: For his part, billionaire investor Jeffrey Gundlach says that most Americans “take a lot of things for granted these days” despite the fact that “we’re looking at a (policy) roadmap that’s clearly headed towards the US dollar losing its reserve currency status.” Ya think? Sadly, the people who don’t understand this are the ones who are most likely to suffer when that fateful day finally arrives: the American public — and the middle class, in particular.

Debit: Even so, Hansen correctly asserts that Americans still “would be better off in the long run with a sound international monetary order.” Indeed we would. But this can only happen after the piper is paid. And he will be paid — whether or not they choose to return to a system based on honest money. Hey … I’ll drink to the that.

Credit: So until the piper is paid, the Fed’s monetary system palliative care will continue. As macroeconomist Daniel Lacalle points out, “The US would go into a severe recession if the Fed wasn’t ‘doping’ the economy.” As a result, “it’s faced with the devil’s dilemma created by its own policy. Either let inflation run and create a stagflation problem or scare the markets by reducing purchases. They will choose the first option, without a doubt.” Not that it matters — both choices lead to the same dead end.

Credit: Here’s the bottom line: Over the past 18 months, the Fed has created $5.2 trillion of new currency, while just $270 billion of gold was mined during the same period; that’s 19 times more dollars than gold — and that doesn’t even factor in the currency created by the other central banks. Despite this fact, gold is $140 less than it was selling for one year ago. That means wealth insurance is currently on sale — and who doesn’t love a good sale?

The Question of the Week

[poll id="387"]

Last Week’s Poll Results

When is the last time you went shopping at an indoor mall?

• Within the last decade (42%)
• Within the last year (30%)
• Within the last month (15%)
• More than a decade ago (12%)
• Never (1%)

More than 2100 Len Penzo dot Com readers responded to last week’s question and it turns out that 5 in 9 haven’t seen the inside of an indoor shopping mall in more than year, if ever. You can thank Internet commerce for that. Who needs to go to a mall when you can have everything delivered to you without leaving home?

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

Shopping malls may be waning in popularity, but they aren’t extinct by any means. Here are some facts and figures on US-based and international shopping malls:

12,000,000 Jobs provided by all US shopping malls.

109,500 Retail shopping centers in the US.

1200 Shops in the Dubai Mall. Yes — that’s the world’s largest mall.

278 Acres of total shopping area in the Dubai Mall.

7 Number of Yankee Stadiums that can fit inside the Mall of America in Minneapolis.

$75 Average amount shoppers spend during a one hour visit to a shopping mall.

20% The increase in average shopper spending for malls with premium food courts.

Source: Quora

Useless News: Therapy Session

Ever since I was a child, I’ve always had a fear of someone under my bed at night. So I went to a psychiatrist and told him: “I’ve got problems. Every time I go to bed I think there’s somebody under it. I’m scared. I think I’m going crazy.”

“Just put yourself in my hands for one year,” said the psychiatrist. “Come talk to me three times a week and we should be able to get rid of those fears.”

“How much do you charge?”

“Three hundred dollars per visit,” replied the psychiatrist.

“I’ll sleep on it,” I said.

Six months later the psychiatrist met me on the street.

“Why didn’t you come to see me about those fears you were having?” he asked.

“Well … $300 a visit, three times a week for a year, is $46,800. A bartender cured me for $10. I was so happy to have saved all that money that I bought a new pickup truck.”

“Is that so?” the psychiatrist replied. Then, with a bit of an attitude, he said, “And how, may I ask, did that bartender cure you?”

“He told me to cut the legs off the bed. Ain’t nobody under there now.”

Moral of the story: It pays to get a second opinion.

(h/t: RickshawETF)

More Useless News

Here are the top five articles viewed by my 39,775 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

1. Approximate Energy Costs of Your Home Appliances
2. My 13th Annual Cost Survey of 10 Brown Bag Sandwiches
3. Mailbag: What Will Happen to Pensions If Hyperinflation Strikes?
4. Is It Finally Time to Get Rid of the Penny?
5. The Pros and Cons of Taking Social Security Early

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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 GC disputed my claim that whirlpool tubs are for suckers:

I’m not sure what you people are talking about. Sure, you have to clean it a lot but, wow, you have to keep it clean anyway.

Thank you. I rest my case.

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