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)
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
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
Lauren P. says
Len the Ag Dept’s. food programs (EBT, school lunch, etc.) are beyond ridiculously wasteful and expensive. My disabled son’s school began offering all kids ‘free’ breakfast & lunch due to Ag Dept. rule that if over 50% of students were eligible for free/reduced lunch, EVERYONE got free lunch & breakfast! When he became eligible for SSDI, we were bombarded w/offers of food stamps. We didn’t want/need them, and it took forever to get them to stop pushing them on us. Completely out of control and a HUGE reason for so many overweight people (pun intended! 😉 )
I’ve seen some pictures of those school lunches and they don’t look very appetizing!
Len Penzo says
Here in California, based on numerous reports, most of those free school lunches seem to end up in the trash because they are so crappy in quality.
When I was a kid, back in the 70s, I remember the lunches at our elementary school were actually pretty good. Especially when it was pizza day. They made them fresh in the cafeteria ovens and they were really good!
L. G. Brandon says
The government wants as many people dependent on .gov handouts as possible. It’s the start of the Food is Medicine WEF inspired proposal where government gains control of the food supply and adds it to healthcare. They will determine what those people buy for food as it relates to their health. They also equate candy to being more healthy than cheese or beef.
Same thing happened to us when my son, who has cerebral palsy, started school. And that was in 1986.
Sara King says
Thanks for another great cuppa joe!
When I was younger I had to go on food stamps for a short amount of time, but I got off the program as soon as I could.
I can see how people today have little incentive to get off of them. When I was on the program I was given books of stamps so everybody knew when you used them. Anyone with a little pride hated that!
Now EBT/SNAP coupons are on credit cards, so nobody knows who is on the dole! So no incentive to get off the dole for many people!
Have a great weekend everybody!
Len Penzo says
That is a great point, Sara. That was essentially the theme behind the meme I posted.
That news reporter saying gold isn’t backed by anything was a great find. What is crazy is she says it with such authority but she has no clue she is exposing how ignorant she is to those who know the truth.
What is sad though is so many people out there confuse her self-assured delivery with intelligence and so they believe her. This is how the public is so misled.
Len Penzo says
I’m actually shocked that journalist was allowed to continue working after news report.
Sam I Am says
Employment numbers out yesterday were through the roof (even though all of the major companies have been announcing layoffs). Going to be interesting to see if Powell pivot gets canceled now. Seems to me he will have to keep raising rates to keep inflation at bay. Curious what you think?
I’m with you Sam. I think in the end it doesn’t matter though because whatever the Fed does is not going to be enough.
Len Penzo says
I think Powell said the Fed was planning to do one more 25bp increase and then hold steady. I don’t think he will start lowering rates until something breaks somewhere.
Just when I thought it was going to $25, silver went back on sale yesterday!
Len Penzo says
That it is. TO be fair, prior to Friday’s drop, I think silver was up almost 40% since November. Not too shabby!
RD Blakeslee says
The question of the week isn’t relevant to the offbeat personally responsible folks whose lifestyles are published at: https://lenpenzo.com/blog/40000-2
Len Penzo says
I’m not sure, Dave. Don’t you think some may still prefer the privacy that comes with using cash?
RD Blakeslee says
Yes! But we do that without thinking about “being happy” with some certain amount of fiat money income
If we go cashless, drug dealers, and hookers will need to accept credit cards. smh
The Lonestar card is very noticeable. It’s easy to tell you’re on food stamps. The increase in food stamp usage could be caused by people forced out of work, and the elderly poor.
Len Penzo says
Strippers too, Bill. Without them, there would be no more need for $1 bills.
You better not use more than $1 bill with a stripper. You’re going to need the rest for antibiotics.
The photo illustration of reported inflation and real inflation is definitely a stark contrast of fantasy and reality.
Len, I read one of your old posts with the comment about the Richard Nixon Eggplant. They used to sell molds to grow vegetables into the shapes of certain people’s heads. Richard Nixon was one of them. Right now, you can buy a pumpkin mold that will grow it into the likeness of Donald Trump.
If times get tough, they can go back to having The Chicken Ranch in La Grange, Texas.