Black Coffee: The ‘Central Bank Turkeys’ Edition

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 terrific week. With the hardest part of it over, let’s get right to this week’s commentary …

It’s hard to soar with eagles when you’re surrounded by turkeys.

— Adam Sandler

Credits and Debits

Debit: Did you see this? California gasoline prices have never been higher. This week they hit an average of $4.676, beating the previous all-time high of $4.671 for regular gasoline set in October 2012. Don’t laugh; it’s coming soon to a gas station near you too. Even so, the Bank of International Settlements will tell you higher fuel prices is a good thing because the potentially-lower demand will help “save” the world from “climate change.” Then again, take that with a heaping spoonful of salt because they also believe this …

Debit: Speaking of the Golden State, I see California has given away $20 billion in fraudulent unemployment benefits since the beginning of the pandemic – that represents 11% of all benefits paid in the state. And if that’s not bad enough, $810 million in benefits were handed out in the names of people who were in prison, including dozens of infamous killers on death row. Hey … who says crime doesn’t pay?

Credit: By the way, it’s not just criminals who are making bank from government-funded pandemic “stimulus” checks. Since the pandemic started, extra disposable income per capita is $10,500 per person, which led chartered financial analyst Bryce Coward to observe: “If we multiply that by the (US) population, we get $3.5 trillion. So it’s no wonder inflation has accelerated to 30-year highs – especially when we consider supply-chain shortages.” Wow. It’s almost as if printing currency out of thin air without a corresponding increase in goods and services would lead to higher prices.

Debit: Despite the fact that many Americans may feel richer thanks to “stimmy” checks and/or a pandemic-induced wage increases, real wages have declined for seven straight months. In other words: Americans are actually getting poorer because US consumer prices have been rising faster than any gains in nominal income over the same period. You know … if this keeps up, it won’t be long before the general public finally figures out that there really is no such thing as a “free lunch” – just like they eventually realized back in 1970s:

Credit: Not long after Jimmy Carter left office in 1980, Fed Chair Paul Volcker successfully killed the inflation monster by allowing interest rates to approach 20% – and that’s when something called ‘credibility inflation’ took root. The blogger known as FOFOA notes that, this was an “expanding confidence in the fiat system to always deliver a higher payoff tomorrow than today – which ultimately destroys the currency structure by believing it can somehow deliver more than reality will allow.” The trouble is, it has been delivering far more than reality should allow … but that game is officially over:

Debit: Of course, the financial media is largely responsible for this subterfuge; but with rising prices now seemingly out of control, their propaganda is finally unraveling because inflation can no longer be hidden. According to FOFOA, “Credibility inflation is why we saw low consumer price inflation for the last 40 years relative to the massive monetary and financial product inflation. Yet it’s far more catastrophic in the end.” As we’re all finally beginning to see. Okay … at least some of us.

Credit: Interestingly, macroeconomist Alasdair Macleod says that, “It’s becoming clear that there has been an unofficial agreement between the Fed, Bank of England, the ECB and probably the Bank of Japan to not raise rates based on remarkably similar statements from the former three in recent days. When they’re all singing off the same hymn sheet, we’re right to suspect they’re doubling down on a market rigging exercise encompassing all financial markets.” Ya think?

Credit: Market analyst Peter Boockvar can see what’s happening. He says, “the Fed’s idea of confronting 6% inflation is to increase their balance sheet by another $500 billion over the next eight months and still have rates at zero. For now they’re not credible, but we’ll see if reality forces their hand to act more aggressively – albeit at the risk of (lower) market valuations and eventually the economy. It’s a tough spot, but a self imposed one.” In the meantime, we’ll keep waiting for the Fed to put on its big-boy pants and finally defend the dollar from being debauched into oblivion. Just don’t hold your breath.

Credit: So why are the central banks seemingly content to allow inflation to run unabated, despite the possibility that at some point it will destroy the currency? Market analyst Michael Lebowitz confirms what many monetary system observers figured out quite a while ago. He says, “They should halt QE immediately and raise rates tomorrow. But they won’t because doing so would (crash) the markets, and that trumps everything at the Fed.” More to the point: The Fed will never raise rates because they’re actually beholden to the banks and the government it serves, not us little people on Main Street.

Credit: Unfortunately for the Fed, they are well aware that our debt-based monetary system will implode if asset prices collapse – so QE must continue until the dollar’s purchasing power is destroyed, which is why asset manager Egon VonGreyez warns that they’re working on introducing central bank digital currencies (CBDCs) in an attempt to fool the people. “They’ll tell us the old debt in dollars has remarkably disappeared and that we now have a miraculous new monetary system – but CBDCs are just another form of fiat currency that won’t survive.” Amen, Brother Egon. It’s gold (and silver) or bust!

Debit: Indeed, VonGreyerz offers a reality check against any Fed claims that CBDCs will solve our current fiscal problems: “You can’t just let one side of the balance sheet disappear without affecting the other side. So if the debt is written down to zero, so too will all assets financed by this debt – which is why we’ll see all market bubbles collapse as much as 90% in real terms, including the stock, bond and property markets.” This is the Achilles’ heel of our debt-based monetary system, where our paper “wealth” is literally somebody else’s “debt.” It’s all a big con game. And, we’re the marks.

Debit: In the meantime, the Fed-induced stock-, bond-, housing- and crypto-market melt-up will continue; a melt-up that’s now little more than a twisted never-ending momentum trading play. That being said, let’s return to FOFOA, who notes that “in the long-line cycles of monetary history, technical momentum trading emerges in the very late stages in its most-frenetic fashion, when it draws the most people into the unproductive activity of trading for trading’s sake. This is also when it draws the greatest profits – right before delivering a catastrophic total loss.” Maybe then we can all return to trading – and working for – real money. Behold …

By the Numbers

The busy Thanksgiving holiday here. At the same time, Transportation Security Administration (TSA) data shows that air travel is rebounding, which means its recent warning of a potential TSA employee shortage couldn’t come at a worse time:

1 Thanksgiving’s rank among the US’s busiest holiday travel periods.

85% Percentage of current airport checkpoint screenings compared to peak pre-pandemic passenger levels.

4,200,000 Estimated number of Americans who will be traveling by air during this year’s Thanksgiving holiday weekend.

11% Estimated percentage decrease in the number of Americans who will be flying this year for Thanksgiving compared to 2019, which was before the pandemic.

3,522,000 Number of Americans who flew during the Thanksgiving holiday in 2020.

Source: Forbes

The Question of the Week

[poll id="399"]

Last Week’s Poll Result

Which of these retirement accounts(s) do you currently have?

• IRA (27%)
• Roth IRA (26%)
• 401(k) (23%)
• Something else (17%)
• 457(b) (5%)
• None (2%)

More than 2100 Len Penzo dot Com readers answered last week’s poll question and it turns out that IRAs seem to be the most popular retirement vehicle, with a slight edge going to the traditional (tax-deferred) version. Nearly 1 in 5 say they have some of the more obscure US retirement account options — or plans that are not US-sponsored. However, the best news is that just 1 in 50 respondents say they currently do not have any funds tied up in a retirement account. Good job, everyone!

If you have a question you’d like to see featured here, please send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.

Useless News: Eye Exam

A Polish immigrant who recently earned his American citizenship papers went to the DMV to apply for a driver’s license.

Of course, once he got there, the first thing he had to do was take the obligatory eye test.

After a long wait in line, the newly-minted Polish-American walked up to the counter. Wasting no time, the gruff clerk pointed to a card that was on the wall behind her with the typical mess of jumbled letters:

P V L T Z Y . . . C Z W I K S N O S T A C Z

“Can you read that?” the clerk asked.

“Read it?” the Polish immigrant replied, “I know the guy!”

(h/t: Bemused-Confused)

More Useless News

Still More Useless News

Yet More Useless News

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

1. Alberta (2.21 pages/visit)
2. Nunavut (2.00)
3. Nova Scotia (1.82)
4. Manitoba (1.77)
5. Saskatchewan (1.68)

9. British Columbia (1.40)
10. Northwest Territories (1.33)
11. Ontario (1.31)
12. Newfoundland & Labrador (1.25)
13. Quebec (1.11)

Whether you happen to enjoy what you’re reading (like those crazy canucks in Alberta, eh) — or not (ahem, all you hosers living on the le frozen Quebec tundra) — please don’t forget to:

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Thank you!!!! 😊

(The Best of) 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 me at: Len@LenPenzo.com

After reading about RD Blakeslee’s experience working on Ford’s 8N farm tractor assembly line way back in 1949, Barbara R. shared this:

We have a 1949 8N. Her name is Daisybelle!

If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message.

Photo Credit: stock photo