Black Coffee: Wake-Up Call

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.

Well … another busy week is behind us. So with that in mind, let’s get this party started …

The serpent, the king, the tiger, the stinging wasp, the small child, the dog owned by other people, and the fool: These seven ought not to be awakened from sleep.

— Chanakya

Credits and Debits

Debit: Did you see this? The word on the street is that the financial wunderkind who became the disgraced founder of the now-bankrupt FTX cryptocurrency exchange, Sam “the Sham” Bankman-Fried – otherwise known as “SBF” – managed to raise more than $1.4 billion dollars from various investors. But all those investments have gone up in smoke, as they are now worth nothing. Zero. Zilch. Zippo. Nada.

Debit: Not surprisingly, the collateral damage is growing with each passing day – as evidenced by Genesis Trading’s announcement that it was suspending crypto redemptions. As asset manager, Michael W. Green, opined this week, “The industry, as it exists today, is built on a foundation of memes and lies. The objective has always been to drive panicked buying of a speculative asset, as the FTX saga demonstrates yet again. There are real issues with the global financial system, and the misinformation spread by the crypto industry has delayed reform. But that’s okay. Because Sam says he’s really sorry.”

Credit: Everybody should take the time to read market analyst Daniel Oliver’s brilliant – and very thorough – explanation of how the entire FTX debacle unfolded. In it, he points out that “all those users who thought they had escaped the fiat-based fractional banking system were in the exact same system – except that the crypto system was run by young criminals and based on assets vastly more volatile than US dollars.” Or to put it even more succinctly:

Debit: In other news, I see that US household debt increased last quarter at the fastest pace in 15 years due to hefty increases in credit card usage and mortgage balances. In fact, credit card balances collectively rose more than 15% compared to the same period last year – that’s not only the largest annual jump in more than two decades, but also one that the Fed notes, “towers over the last eighteen years of data.”

Debit: Speaking of hefty price increases, if you’re wondering how long it could take inflation to get back to the Fed’s long-time target rate of 2%, history provides some clues. For example, the CPI continued to rise for more than a year after Paul Volcker was hired to kill the raging inflation of the 1970s – and then it took five more years to get it below 3%. That’s bad news for everyone who has been anticipating a sharp pullback in prices next year.

Credit: As we pointed out last week, the unprecedented global economic contraction currently underway is due to the massive debt overhang plaguing nations, corporations and households throughout the entire developed world. And the only way out is via a global revaluation of sovereign gold reserves. Er … except for Canada. Why? Well … because you probably have more gold on your ring finger than Canada has in its vaults. In other words: Canada has zero gold reserves. No, really. Unfortunately, the only way holding zero gold reserves can work is if their Treasury is willing to employ an ever-vigilant watchdog willing to prevent frivolous government spending …

Credit: The good news for Canada is that nations don’t really need a lot of gold in their treasury vaults to save themselves from a collapsing monetary system. In fact, when it comes to maintaining healthy functional economies, only a small amount of gold is necessary for any nation to preserve its ability to conduct international trade. That being said, if public confidence in a nation’s currency is severely lacking, then additional yellow metal may be required to reintroduce and maintain circulating gold coins (specie) within the economy. In the meantime, that probably won’t stop them from trying this first:

Credit: Mexican billionaire business magnate Hugo Salinas Price explains that gold imposes discipline that fiat currencies can’t because governments would no longer be able to rely on unlimited credit to fund its deficits. And that’s because, in a gold-based system, large national deficits result in excessive imports that would require the need to devalue the currency. For that reason, only gold-producing countries could run trade deficits, limited to the amount of yellow metal they could mine to pay for them. “Thus,” says Salinas-Price, a gold-based monetary system “would return the world to a healthy state of balanced trade and balanced national budgets.” Very true. But only after a lot of kicking and screaming first.

Debit: By the way, Salinas Price notes that both gold and silver prices are artificially set each day “by a small group of individuals in London and New York in order to confuse the public.” How so? The billionaire says the price fixing makes the world’s fiat currencies – and the US dollar in particular – appear stronger than they are, thereby maintaining public confidence in the central banks’ fraudulent debt-based fiat monetary system. Then again, confusion is a key tenet for all central bankers – which is why most people today still believe that the Federal Reserve Bank is a government entity looking out for the public’s best interest.

Credit: Of course, many people refuse to buy precious metals precisely because they know those markets are rigged. However, for those who still want to protect the purchasing power of their savings from the world’s dying fiat monetary system, Salinas Price says you should buy gold and silver “when you want to buy – at any price – and then wait. You may die before gold or silver prices rise. But if you’re still breathing when the dollar dies, what you can acquire with an ounce of gold will be a magnificent surprise – the fruit of a life of patience.” Yes, it’s a bold prediction; but it may also be one that is actually understated.

Credit: With Mr. Salinas Price’s prediction in mind, we’ll end today with this chilling obsevation from Mr. Oliver: “The FTX saga has immediate implications for investors. First, it’s yet another signal that the COVID bubble is collapsing at an accelerating pace. The COVID bubble rests atop the QE bubble, which sits on the shadow-banking system bubble, which relies on the banking bubble, which depends on the currency bubble. The questions are: At what bubble layer will the Fed make a determined defense – and will it be successful.” Thankfully, for those with wealth insurance, those questions are essentially moot.

Last Week’s Poll Result

Which of these hard assets do you currently own? (pick all that apply)

• Primary residence (62%)
• Silver (10%)
• Gold (8%)
• Land (7%)
• Art or other collectibles (5%)
• Rental property (4%)
• None (4%)

More than 2100 Len Penzo dot Com readers answered last week’s poll question and it turns out that 1 in 25 people say they currently have no hard assets in their possession. As for those who own physical precious metals, silver is slightly more popular than gold.

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.

The Question of the Week

[poll id="449"]

By the Numbers

Here are the ten best occupations for being self-employed, based on a composite score derived from the median annual wage in 2021, projected employment growth from 2021 to 2031, and the average unemployment rate over the past two years:

10 Travel agents (composite score: 64.9)

9 Food service managers (66.8)

8 Producers and directors (69.9)

7 Lodging managers (70.2)

6 Interpreters and translators (74.2)

5 Construction managers (77.6)

4 Marketing managers (78.2)

3 Management analysts (81.5)

2 Personal financial advisors (85.5)

1 Health services managers (97.2)

Source: HireAHelper

Useless News: Who’s the Boss?

One day, there was a catastrophic event which caused all living creatures on earth to die. To sort things out, everyone was sent to the Pearly Gates.

After a brief wait, God approached everyone and commanded, “I want all of the women to go with St. Peter. As for the men, I want you to make two lines. One line for the men who ruled their women on Earth, and the other line for the men who were ruled by their women.”

The next time God looked, all of the women were gone, and there were two lines of men. The line of men who were ruled by their women was a thousand miles long, while the line of men who ruled their women consisted of a single soul.

After doing a double take at the scene before him, God became angry and said, “You men should be ashamed of yourselves! I created you in my image and yet you were all whipped by your mates. Now all of you — behold the only one of my sons who managed to make me proud. Learn from him! Now tell them, my son — how did you manage to be the only man standing in this line?”

The man bowed his head and paused for a moment. Then he said, “I’m not really sure. All I know is that my wife told me to stand here.”

(h/t: Santander)

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. Manitoba (1.88 pages/visit)
2. Quebec (1.75)
3. Alberta (1.70)
4. Ontario (1.64)
5. British Columbia (1.61)

9. Nunavut (1.50)
10. Yukon (1.24)
11. New Brunswick (1.16)
12. Northwest Territories (1.13)
13. Prince Edward Island (1.05)

Whether you happen to enjoy what you’re reading (like those crazy canucks in Manitoba, eh) — or not (ahem, you hosers living on Prince Edward Island) — please don’t forget to:

1. Subscribe to my weekly Len Penzo dot Com Newsletter! (It’s easy! See the big green box in the sidebar at the top of the page.)

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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 me at: Len@LenPenzo.com

Here’s a strange request from Kate that I found in my inbox:

I’m doing a homework assignment on snakes. Do you know the most important snake?

I’m tempted to give you an answer, but I don’t want to make an asp of myself.

If you enjoyed this edition of Black Coffee and found it to be informative, please forward it to your friends and family. Thank you! 😀

Photo Credit: stock photo