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?
Beware of little expenses. A small leak will sink a great ship.
– Benjamin Franklin
It sounds mercenary and smacks of rats leaving the sinking ship, but get real; when everyone is bailing out, you don’t want to be the last man in line.
– Robbie Fowler
Credits and Debits
Debit: Did you see this? Americans’ inflation expectations over the next year are soaring again. A new survey has found that 70% of Americans admit to being stressed about their personal finances these days, while 52% said their financial stress has increased since before the Covid-19 pandemic began. Not surprisingly, 60% of respondents cited inflation as the main contributor to their financial stress, followed by economic instability (43%), rising interest rates (36%) and a lack of savings (35%). And if that ain’t bad enough, 15% are worried about their favorite stores closing down …
Debit: By the way, the same survey also found that 58% of all Americans are now living paycheck to paycheck. I guess that’s not surprising when you consider the latest survey of US leading economic indicators (LEI) tumbled for the 12th consecutive month – and 13th time in 15 months. That’s the longest streak of declines since just prior to the Great Financial Crisis, when the US LEI survey saw 22 straight months of declines from June 2007 to April 2008. But there’s no need to panic – I’m sure that’s only a coincidence.
Debit: Of course, the real reason for the price inflation that’s stressing Americans out is the US government, which is currently borrows a staggering $6 billion every single day. Sadly, a big chunk of that cash is “paid for” with the printing press, rather than tax revenue. In other words: The government is spending far more than it earns.
Debit: For those who are wondering why the US prints so much money that it doesn’t have, the answer is: because it can. That exorbitant privilege is the result of the US dollar (USD) being the undisputed global reserve currency since the 1940s; as a result, any excess dollars that are conjured out of thin air end up being willingly accepted by other nations in exchange for their hard-earned goods and products. Even so, the annual cost of servicing the US debt exceeded $800 billion as of March – but with yields still rising, expectation are for that figure to hit $1 trillion by late summer.
Credit: However, as economist Peter St. Onge points out, “Reserve currency status looks great on paper: You get to print stacks of green paper and foreigners give you cool stuff for it, like toasters, luxury cars, and copper mines. The problem is: who profits? Who gets paid when foreigners crave the green paper? Unfortunately, it’s not the American people; it’s whomever is printing money: The Fed, meaning the Treasury, to whom they hand their ill-gotten profits, and – you guessed it – Wall Street. Commercial banks.” Oh … and speaking of Wall Street:
Credit: Indeed, as John and Nisha Whitehead recently remarked, “the government isn’t spending our tax dollars to make our lives better. We’re being robbed blind so the governmental elite can get richer. In the eyes of the government, ‘we the people, the voters, the consumers, and the taxpayers’ are little more than pocketbooks waiting to be picked. ‘We the People’ have become the new, permanent underclass in America.” Uh huh. It used to be the government worked to serve the people, but those days are long gone. Today, the people have been enslaved; forced to support a gargantuan government that only keeps getting bigger.
Credit: That’s not all the Whiteheads had to say. In fact, they were just getting warmed up. “There was a time,” they noted, “when our forebears said ‘enough is enough.’ They stood their ground, and refused to support a system that was slowly choking out any attempts at self-governance. Unfortunately, in the 200-plus years since … we’ve let bankers, turncoats and number-crunching bureaucrats muddy the waters and pilfer the accounts to such an extent that we’re back where we started.” Yes; but that’s only because large centralized government officials make decisions and manage public affairs so much better than individuals at the local level. Er … said no one ever.
Debit: Needless to say, there will be consequences for the government’s inability to live within its means. In fact, the federal government’s insatiable appetite for spending has led the Washington Post to warn that America “has reached a hazardous moment where what it owes, as a percentage of the total size of the economy, is the highest since World War II. If nothing changes, the US will … weaken its national security, imperil its ability to invest in the future, unfairly burden generations to come, and require cuts to Social Security and Medicare.” Thankfully, the battle for reform will continue as long as Ron Paul is still alive.
Debit: So, what if foreigners suddenly decide they no longer want any more of our rapidly-depreciating dollars in exchange for their commodities and products? Well … once again we go to Mr. St. Onge, who points out that if the “river of USDs to foreigners reverses, the dollar collapses, and 70 years of Fed and Wall Street money printing comes rushing back like a tsunami running up a canyon – (resulting in) double-digit inflation, over multiple years, at a minimum. And who’s left holding the bag as the dollar becomes increasingly worthless? Easy: Americans.” Yep. Sadly, most Americans are focused on “more important” things …
Debit: Somewhat ironically, while a thoroughly-debauched USD will turn out to be extremely bad news for Americans, it will be great news for the federal government. That’s because the US will be able to easily “pay off” its gargantuan debt with dollars that have been rendered all but worthless to those who hold it. I know what you’re thinking: If that’s true, then what’s an average middle-class American like me supposed to do? Well … if you want one economist’s opinion, St. Onge concludes that Americans who don’t “swap dollars for gold or goats will go down with the ship.” So tragic. Somebody pass me a tissue …
Credit: Five thousand years of human history has indisputably proven that gold (and silver) are the ultimate stores of wealth; they are also the world’s only true money. And there isn’t much of either precious metal to go around. In fact, every ounce of gold ever mined would roughly fit into a 66-foot cube. Gold is so rare that if each Chinese citizen were to buy a single ounce of the yellow metal, it would consume the annual supply for the next 200 years – unlike here in the US, where most Americans already own plenty of physical gold. Oh, wait …
Credit: Alas, our current debt-based fiat monetary system is so hopelessly corrupt and broken that it’s beyond redemption. At some point, the system will die or undergo a forced reboot via a very painful devaluation relative to gold. However, the sooner this happens, the better – because delaying the inevitable day of reckoning only serves to make things worse.
Last Week’s Poll Results
Will the US return to some form of gold standard by the end of this decade?
- No (69%)
- I’m not sure (20%)
- Yes (11%)
More than 1900 Len Penzo dot Com readers responded to last week’s question and it turns out that 7 in 10 say there is no chance the US will revert to a gold-based monetary system before 2030. That’s probably a good bet because governments hate the fiscal restraint imposed on them by the yellow metal. That being said, America’s large debt load will eventually force a devaluation of the USD against gold – either willingly in a controlled manner, or chaotically by the rest of the world.
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="471"]
By the Numbers
A recent study attempted to find out what American employees actually value in 2023. Here are a few highlights:
74% The share of survey respondents who opted for a $50,000 one-off bonus versus a permanent four-day work week.
70% The percentage of respondents who say they’d prefer to work with a human assistant rather than an AI assistant.
70% The share of respondents who would be willing to commute 2 hours for their dream job.
30% The percentage who say they’d take a $20,000 pay cut if they never had to attend a meeting via Zoom again.
25% Respondents who claim to have seen unintended nudity during a work video call.
14% The percentage of workers who admitted that, if they knew their office crush was into them too, they’d leave their partner.
Source: SelectSoftwareReviews.com
Useless News: Frank and Leo
Two men in their late 70s had been friends all of their lives. When it was clear that Frank was dying, Leo visited him every day.
One day Leo said, “Frank, we both loved playing golf all our lives, and we started playing soon after high school. Please do me one favor: When you get to heaven, somehow you must let me know if there’s golf there.”
Frank looked up at Leo from his deathbed and said, “Leo, you’ve been my best friend for many years. If it’s at all possible, I’ll do this favor for you.”
Shortly after that, Frank died.
A few weeks later, Leo was awakened from a sound sleep by a blinding flash of white light and a voice calling out to him, “Leo!”
“Who is it?” asked Leo, sitting up suddenly. “Who is it?”
“Leo — it’s me, Frank.”
“You’re not Frank; he just died.”
“I’m telling you, it’s me, Frank,” insisted the voice.
“Frank! Where are you?”
“In heaven,” replied Frank. “I have some really good news and a little bad news.”
“Tell me the good news first,” said Leo.
“The good news,” Frank said with joy and enthusiasm, “is that there is golf in heaven. Better yet, all of our old buddies who died before me are here too. Even better than that, we’re all young again. Better still, it’s always Summertime and it never rains. And best of all, we can play golf all we want, and we never get tired. And we get to play with all the greats of the past.”
“That’s fantastic!” replied Leo. “It’s beyond my wildest dreams! So what’s the bad news?”
Frank said, “You’re in my foursome this Saturday!”
(h/t: RD Blakeslee)
More Useless News
Here are the top five articles viewed by my 45,714 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- 34 Financial Tricks to Help You Retire Early
- Are Energy Efficient CFL Bulbs Worth Paying More For?
- Blind Taste Test: Does Bottled Water Really Taste Better Than Filtered Tap?
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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
It’s disgusting how the entire world is slowly limiting people’s freedom. Soon they’ll decide when the DVD player lets you watch your movie.
I tell you what: They better not mess with my Raisinettes!
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I’m Len Penzo and I approved this message.
Photo Credit: public domain
Very nice pictures of gold and silver coins struck by the U.S. mint. But they are not specie – that is, not intended for use in commerce.
“Specie” these days are coins struck in base metals, “valued” as part of the fiat dollar hegemony.
Here’s an article which reports that the congress (bipartisan!) is going to “save money” by using even “cheaper” base metals. Not a clue in the article that its implicit assumption of the eternal verity of the U.S. dollar is false and that even base metal coinage is becoming falsely “precious”, priced in fiat dollars.
https://www.cnbc.com/2023/04/20/senators-to-introduce-bill-allowing-us-mint-to-alter-coins-metal-content.html
Back in the 1970s when our coins suffered their first debasement, I put all the coins I had in a drawer and just left them there. Now they are “worth” substantially more in fiat price. A 1970s 90% silver quarter is now “worth” about $4.53 in fiat dollars.
http://coinapps.com/silver/quarter/calculator/
The article points out that the commodity price of the metals used to strike a contemporary nickel is about ten cents, so if you-all do as I did years ago and put your present day specie (e.g.) nickels in a drawer, someday you can give your grandkids some “appreciated” coins worth quite a lot more than their face value. With nickels, they are already 100% ahead of the game.
Remember, it’s not just commonly recognized precious metals that “appreciate” in fiat money price – it’s hard assets of all kinds.
That is a very good point.
Good posts, Dave.
My grandpa used to give me a dollar in silver coins ( dollars, half dollars, quarters, or dimes) every time I came to visit. If I am ever blessed with grandkids of my own, I am going to do the same for them using the same coins my grandfather gave me (along with some of my American Silver Eagles too). Every time I do, I will use it as an opportunity to teach them the difference between money and currency – and paper vs. real wealth.
Hi Len,
Thanks for the cuppa. What a great roundup this week!
That receipt you shared says it all, doesn’t it? 🙂
Have a great weekend everybody!
Sara
It does! And thank you, Sara.
Those of us who are older call those flashing dashboard lights “idiot lights”. They are called that because when they come on it is usually too late.
You got that right, Sam.
When he ran for president, Ron Paul was just what the doctored ordered. Too bad everybody ignored him. He has been warning about all the fiscal problems the U.S. now finds itself for 25+ years and now the chickens are coming home to roost. It’s a shame.
Ron Paul is the best. I miss him on the House Banking Committee; he was one of the very few people on that committee to understand why our debt-based monetary system is a total fraud, and his questioning of past Fed chairs was always very entertaining because he knew those Fed officials knew the system was rigged too.
Right On! Too bad the majority of the electorate, generally apathetic, did not scream Paul’s message from the mountain tops to the majority of clowns in the government. Guys like Paul will never be a prophet in their own land.
I can almost believe that “buy now pay later” for groceries. My food bill has exploded since 2021 – and I buy a lot of ramen and boxed mac & cheese!
I wince every time we go to the supermarket now, Madison. Food price inflation really is disconcerting.
I stopped eating at fast food joints after they moved to skeleton staffs. I don’t miss it. I have lost 30 lbs though since I stopped.
Good for you, Fred!
We eat out once every other week or so, but it is almost always at a regular restaurant. I said “almost.” (Yes, at times my weakness for fast food overtakes me.) 🙂
Len, do you think work from home is here to stay? My hubby says yes. I’m not so sure. Seems like more and more companies are beginning to ask their employees to start coming back to the office, even if its only a couple days a week. Thanks for the round up!
For the most part, I do think it is here to stay – at least for those who can truly do their jobs entirely from home. There is no putting the toothpaste back into the tube.
I think gold buying is required whether dollar is anchored to gold or otherwise.
A person (I.e our politicians) who doesn’t have the discipline to budget and spend within means isn’t a person who is suddenly going to stop spending gold anchored dollars. They’ll still print money and spend and devalue the dollar. It is not like the geniuses think that they are not devaluing the dollar …. They know and they don’t care … and would rather get re-elected ….
We would just have a little more obvious visibility to the shenanigans. But you could still never trust the dollar ….
Well, Kyron … if the dollar is tied to gold – and the rule of law is upheld – then politicians will be forced to live within their means.
After all, that’s why governments fight tooth and nail against tying a percentage of the currency supply to its gold holdings.
I can’t believe the price of potatoe chips and tortilla snacks. Not only has the size of the packaging and serving size shrunk, but price is insane. About time to start making my own chips and dip. Can I promise to pay you on Tuesday for my chips on Sunday? Credit card balances are through the roof as well. Thanks for the cup of reality.
CO2, I often make my own tortilla chips – usually in the summer with homemade salsa too. Never tried making my own potato chips – although I guess it’s really no harder than making my own french fries. Just slice the potatoes differently!
So ….. US receipts down. US spending up.
Par for the course.
Yep. One day, that will come to an end. Hopefully sooner rather than later.
Around 1967, the US government secretly made a deal with the Saud royal family to guarantee they remained on the throne in exchange for Saudi Arabia tying the price of oil to the USA dollar. It allowed the government to establish programs that should have been temporary not permanent. They were able to spend wildly knowing they’d not be in office when it hit the fan. Now, Saudi Arabia is part of the group discussing a new world reserve currency. The USA is going to be hit with trillions of those petrodollars coming back home.
The loss of jobs to Bush’s NAFTA and Clinton’s China trade agreements have left us in a situation hotter than a hooker’s door knob on nickel night. By intentionally destroying the middleclass, the 1% have control. The Golden Rule: Whoever has the gold, makes the rules.
Inflation will reach never before seen levels in the USA, and in the panic, the government may take what’s left of our role in governing.
We certainly live in interesting times, Bill. I’ve seen enough of this movie, though. I wish we could just fast forward to the end, so we can all start working to make things better.