Black Coffee: Par for the Course

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’ve got another busy weekend ahead of me, so let’s get right to this week’s commentary …

You don’t know what pressure is until you play for five bucks with only two bucks in your pocket.

– Lee Trevino

Credits and Debits

Debit: Did you see this? The cost of the federal food stamps program – known as the Supplemental Nutrition Assistance Program (SNAP) – hit an all-time high of $120 billion last year. In 2019, which was the last year before the pandemic, food stamp costs were just half of that, which translated to an average monthly cost of $130 per welfare recipient. Last year, that increased by 78% to $231. The participation rate also soared between 2019 and 2022 – from 35.7 million to 41.2 million. Incredibly, that means 1 in every 8 Americans now get government food assistance.

Credit: Then again, as Zero Hedge points out, “All of this is a little odd since the number of people on food stamps is at a record high while the post-COVID-lockdown employment picture has improved dramatically.” One astute commenter pointed out the dichotomy between the US Department of Agriculture – which proudly touts the “success” of its food assistance program – and the Interior Department, which warns Americans that feeding bears makes them dangerously dependent on handouts. But I guess that’s par for the course, isn’t it? In any case, I think it’s clear the Interior Department gets the nod on this one …

Debit: On a somewhat related note, VISA reported this week that Americans’ consumer payment trend shifted significantly from debit cards to credit cards during the last three months of 2022, suggesting consumers struggled to make ends meet. For those counting at home, the total purchases in USD charged to debit cards fell 1%; at the same time, credit card volume increased 5%. As for those of you who believe the government’s story that inflation is now “officially” under 7%, I’ve got a great deal on some beachfront property in Barstow that you may be interested in buying.

Debit: Meanwhile, a new study has found that 68% of people are worried they wouldn’t be able to cover their living expenses for just one month if they lost their primary source of income. And when push comes to shove, the majority (57%) of US adults are currently unable to afford a $1000 emergency expense. Hmm. However, this makes absolutely zero sense. After all, the government narrative that is dutifully being parroted by the mainstream financial media is that everything is better because inflation is falling. Oh, wait …

Debit: Not coincidentally, separate report that came out last month found that 72%, of middle-income families with incomes between $30,000 and $100,000 say their earnings are falling behind the cost of living – that’s up from 68% a year ago. A similar share, 74%, said they are unable to save for their future – that’s up from 66% a year ago. Makes sense. Especially now that bars and eating establishments are now offering daily “specials” like this:

Credit: So what does all of this mean? Well … if you believe financial journalist Michael Snyder, he says it’s a sign that “The entire system is cracking and crumbling all around us, and there is much more pain ahead.” If only this guy had got the message in time:

Debit:  Needless to say, the Fed isn’t convinced that the system is cracking, as they raised short-term interest rates again – this time by just 0.25%, which brings the Fed’s benchmark rate to 4.75%. That’s the highest since October 2007. But they also cut the pace again, after raising rates by 0.5% in December and 0.75% at the four previous meetings before that. The question is: Is this new 4.75% interest rate enough to put an end to the sharp decline in the US dollar’s purchasing power with inflation still running at 15%? Yeah; it’s a rhetorical question. But for the benefit of the slow kids in the back of the room … here’s a hint:

Credit: In light of the latest move by the Fed, it should be no surprise that the International Monetary Fund (IMF) just reversed a decades-long monetary policy. Gold market analyst Ronnie Stoeferle reports that until last week, “the IMF considered gold to be a ‘barbarous relic’ and advocated for its replacement with … (fiat) reserve assets. But they now recognize the importance of gold in a diversified international reserve portfolio and are allowing member countries to hold gold as part of their official foreign exchange reserves.” Er … unlike today’s laughably clueless “financial” reporters:

Credit: Of course, the IMF didn’t do this willingly; central banks forced their hands by becoming significant buyers of gold over the last decade. Stoeferle says central banks understand that the yellow metal is “a safe haven in periods of economic, financial and geopolitical volatility.” And so they’re using gold as a hedge and steadily increasing their gold holdings when its expected return is high, while financial assets – especially US Treasury securities – is low. Imagine that.

Credit: By the way, the IMF’s recent gold declaration is a tacit affirmation from one of the world’s largest financial institutions that the yellow metal is on the verge of reclaiming its role as a primary player in the global monetary system. The move, when coupled with a sharp increase in central bank gold purchases over the past decade, certainly suggests that the writing is on the wall for fiat currencies. Regardless, the central banks are clearly in self-preservation mode. With that in mind, maybe it’s time for you to consider taking a similar mindset.

 

By the Numbers

According to a study reported by Inc the ideal income for life satisfaction in the US was found to be $105,000. To estimate how much money the typical person needs to be happy in every US state, GoBankingRates factored in each state’s cost-of-living index and used Inc’s $105,000 figure as the happiness “benchmark.” Here are the states with the highest and lowest minimum “happiness” incomes:

50 Hawaii (happiness income: $202,965)

49 New York ($155,610)

48 California ($149,310)

47 Massachusetts ($141,750)

46 Oregon ($136,605)

5 Arkansas ($95,445)

4 Alabama ($92,395)

3 Oklahoma ($92,295)

2 Kansas ($90,825)

1 Mississippi ($87,465)

Source: GoBankingRates

Last Week’s Poll Results

What is the minimum annual income you need to be truly happy?

• $75,000 (27%)
• $50,000 or less (27%)
• $100,000 (21%)
• $150,000 (16%)
• $200,000 (5%)
• More than $200,000 (4%)

More than 1900 Len Penzo dot Com readers responded to last week’s question and it turns out that 5 in 9 say an annual income of $75,000 is enough to keep them truly happy. It’s nice to know that’s not only significantly less than the $105,000 considered to be the ideal income for life satisfaction according to a study by Inc – but also lower than the lowest happiness income of any US state.

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.

The Question of the Week

[poll id="460"]

Useless News: Your Shopper’s Special

I was walking into my local grocery store yesterday. There was a big sign … right there at the entrance. It read:

Upon arrival please go to our Customer Service Counter for a couple of big wet kisses on the mouth.

So, I walked over there, and sure enough there was a line of customers stepping up one by one and getting a big sloppy kiss.

When my turn came, I asked the woman behind the counter what all of this was about. She said, corporate had determined that we should kiss all of our customers before we screw them at the checkout line.

(h/t: Cautiously Pessimistic)

More Useless News

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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

After reading last week’s Black Coffee and my comments regarding the importance of the yellow metal, Curtis dropped me a line to question my logic. It closed with this warning:

You can’t eat gold, Mr. Penzo!

Actually, you can, Curtis. In the meantime, maybe you’d like to share some of your favorite fiat dollar recipes with the rest of us.

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

I’m Len Penzo and I approved this message.

Photo Credit: public domain