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 an enjoyable week. Without further ado, let’s get right to this week’s commentary …
It’s difficult to get a man to understand something when his salary depends upon his not understanding it.
– Upton Sinclair
Statistics are like a bikini. What they reveal is interesting. But what they hide is vital.
– Aaron Levenstein
Credits and Debits
Debit: Did you see this? Most people are at least somewhat aware that the government has been fudging its inflation data since 1981. However there’s a much smaller group who also understands that the bureaucrats have been fudging employment figures since the late 1990s, after the addition of some statistical hocus-pocus known as “the birth-death model.” Sadly, this model takes statistics beyond the misleading phase and into the realm of, shall we say, “intentional dishonesty.”
Debit: Frankly, the statistical sleight-of-hand has become hard to ignore this year. But while the press has been mindlessly parroting government claims that new job creation has been off the charts for the last 12 months, they completely ignore the fact that the birth-death model has added 1.84 million jobs since last March, or a whopping 43% of all payrolls added during this period. This means that almost half of all “job gains” in the past year are based on nothing more than bureaucrat estimates inserted into an excel spreadsheet – not actual data.
Credit: But wait … it gets better. As precious metals analyst Craig Hemke points out, April “also marked the 13th consecutive month that the (labor) report somehow managed to ‘beat expectations.’ This is unprecedented and, along with the consistent downside revisions that follow, should make it obvious to everyone that the government employees at the BLS are actively gaming the report for political purposes.” Curiously, despite a supposedly-booming economy with more and more people finding jobs every month, the growth in withheld taxes has been in a steady decline since the beginning of 2022. It’s all so odd.
Debit: Then again, anybody who tries to compare the current banking crisis to the number of banks that went down in the Great Financial Crisis (GFC) of 2008 should be horrified. After all, the failures already amount to hundreds of billions more than what was seen during the GFC. The trouble is, since then, the Fed has increased its balance sheet from $900 billion to more than $9 trillion, while the National Debt has quadrupled from $8 trillion to almost $32 trillion.
Debit: The truth is, the Fed lost control of the debt-based monetary system in 2008. In essence, that’s when the USS America hit the iceberg. Since then, the hole in the hull hasn’t been fixed; the Fed has simply papered it over with a gargantuan amount of debt. As for the entrenched inflation, that’s the monetary system’s stern rising into the air before it takes its final plunge to Davey Jones’ Locker. Don’t think the Fed isn’t aware of this, which begs the question: What else does the Fed know that they aren’t admitting? I think I’ve got the answer. But we should probably ask this guy. You know … just to be sure:
Credit: You’d think all of this would be obvious – especially to those who supposedly should know better. However, as Brandon Smith points out, “Not long ago we had Janet Yellen and Paul Krugman, economists supposedly at the front of the pack, both proving to be utterly ignorant – or strategically dishonest – on the effects of central bank stimulus measures and the threat of inflation. In fact, they both consistently denied such a threat existed until they were crushed by the evidence.” Well … at least the stock market is soaring thanks to all of that stimulus … er, assuming we define Facebook, Amazon, Apple, Netflix and Google as “the stock market.”
Debit: Of course, the general public will never wake up as long as the nation’s leading government economists and bureaucrats continue to fudge the data so they can pretend nothing is wrong. So here we are; waiting for that infamous Minsky Moment when people realize the situation will never get better until and unless the US dollar is sharply devalued relative to gold, or we get a new monetary system entirely. And for the record, a trillion-dollar coin won’t reform anything.
Debit: The good news is most mainstream economists seem to be awakening from their decades-long slumber. As Smith points out, 80% of economists now acknowledge that central banks “face a trade-off between managing inflation and maintaining financial sector stability.” They’re also predicting a prolonged period of higher interest rates that could compromise Western central banks’ ability to rein in inflation. Although it appears some Fed members didn’t get the memo. Probably because they were too busy reading the works of Yogi Berra:
Debit: In the meantime, a study on the fragility of the US banking system found that 186 more banks are at risk of failure – even if only half of their uninsured depositors who stand to lose a part of their deposits if the bank fails, decide to withdraw their funds. So unless these American banks are able to stop the cash erosion that’s now rapidly undermining these institutions’ fiscal foundations, they’re going to eventually end up in a situation similar to this:
Credit: Oh … and for those of you wondering when all of these bank runs will finally end, sagacious macroeconomic commentator Franklin Sanders provides a pithy answer: “When there’s only one bank.”
Credit: By the way, Mr. Sanders also pointed to a new Silver Institute survey that reveals two nuggets of staggering news: First, the silver supply deficit in 2021 and 2022 consumed the previous 11 years’ cumulative surpluses. And if that’s not enough, the Institute is forecasting another large silver deficit this year. Hey … I’m not sayin’. I’m just sayin’.
Credit: We’ll close this week with some parting wisdom from Mr. Smith who says, “When the establishment itself is openly acknowledging that gravity exists and that we are falling instead of flying, it’s time to get ready and take cover. They never admit the truth unless the worst case scenario is right around the corner.” That makes a lot of sense. If true, the amount of time available to grab a financial lifeboat via physical gold and/or silver is growing short. For responsible people, that should be a no-brainer decision. But, sadly, most of them are going to go down with the ship anyway.
The 13th annual Mother’s Day Index is out and it has found that the work moms typically perform for their families this year could justify an annual composite salary of more than $133,000. That’s an increase of 5% over last year’s findings. Here are the ten “mom jobs” that contributed the most on a pro-rated basis to that $133,000 composite salary:
$2852 Laundry worker
$4786 Mental health worker
$11,914 Social worker
$12,776 Miscellaneous instructor
$23,537 School teacher
$29,578 Childcare worker
Last Week’s Poll Result
How much was your federal tax refund this year?
- I didn’t get a refund (43%)
- $1000 or more (31%)
- Less than $1000 (26%)
More than 2000 Len Penzo dot Com readers responded to last week’s question and it turns out that almost 3 in 5 received a refund this year, with more than half of those totaling more than $1000 – as was mine. Although now that I’m retired, I expect my days of receiving future large tax refunds are gone.
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.
Useless News: Decisions, Decisions
A man died and went to Heaven; at the Pearly Gates he was told he had a choice of Heaven or Hell. To help him decide, an angel took him on a tour.
Heaven was beautiful, and tranquil.
When the tour was finished, the man said he wanted to see what Hell was like. So the devil obliged by showing him around Hades – and what a tour it was! The man was wined and dined. The place had gorgeous weather, golf courses, free-flowing booze, and beautiful women, with parties going on everywhere.
After touring Hades, the man returned to the Pearly Gates and said, “I want to go to Hell.”
The angel said, “Are you sure? Because once you’re there, you can’t change your mind.”
“I’m sure,” replied the man.
Poof! He was in Hell. Only this time it was hot, with suffering everywhere. And everyone was being tormented.
So the man said to the devil, “I don’t understand. When I got here I saw nothing but perfect weather, great golf courses, free-flowing booze, beautiful women, and parties everywhere.”
The devil said, “Oh, that’s our PR department; they’re all former politicians. They promise want you want to hear. But when you finally get it, it’s hell.”
More Useless News
Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Kansas (2.26 pages/visit)
2. Connecticut (2.21)
3. Arkansas (2.16)
4. Tennessee (2.10)
5. Massachusetts (2.09)
46. Mississippi (1.54)
47. Alaska (1.51)
48. Wyoming (1.50)
49. Oregon (1.41)
50. West Virginia (1.31)
Whether you happen to enjoy what you’re reading (like my good friends in Kansas) — or not (ahem, West Virginia … for the second month in a row!) 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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Thank you!!!! 😊
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
This week’s article on Starbucks’ expensive coffee drew plenty of interesting responses, including this one from Garrett, who took exception to my suggestion for saving money by brewing Folgers at home:
I agree that Starbucks is overrated and overpriced, but Folgers?? Come on.
You’re right — but I was on a tight deadline and Chock Full O’ Nuts was too many words.
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
RD Blakeslee says
This week’s “Black Coffee” treats statistical aberration of reality. Sometimes it’s accidental, such as when gross conclusions are drawn from the performance of a small database.
There’s an example here in “Black Coffee”: Because I have “insider information”, I can explain West Virginia’s going from first to last place in terms of readers’ pages viewed per visit, in a short period of time.
When my home state of West Virginia was riding high, I was campaigning to get my friends, acquaintances and anybody else I could round up, to read “Grandfather Says” I even advertised in our local weekly newspaper.
There are about a hundred pages in “Grandfather says” and a few readers could read quite a few of them and, because the total readership of lenpenzo.com is a few thousand or so, the result would be to magnify the readership from WV.
The reverse happened in the aftermath: Once I ran out of new conscripts to read “Grandfather Says”, the statistical measure of pages read per visit shrank dramatically.
Len Penzo says
Well, Dave … I have a feeling your fellow Mountaineers will turn things around next month. Very rare to be in bottom three months in a row – and in 14+ years it’s never happened four times in a row.
RD Blakeslee says
If only the years hadn’t caught up with me, maybe I could round up a few more readers for you, Len.
Len Penzo says
My problem is now Google. I am buried so deeply now that very few people find me there any more. Almost all of my new readers get here via word of mouth and social media.
Lauren P. says
Good morning, Len, and btw, your ‘coffee’ is a far better deal than Starbuck’s!
Do you think the folks running things even CARE what happens anymore? I don’t. Scarier still are the people who still have faith in them and their sycophant media partners. Interesting times…
Happy Mothers Day to your Honey Bee! 🙂
LOL! You’re right, Lauren! I like Len’s coffee better than Starbucks too!
Len Penzo says
Lauren, thank you!
And I’m sad to say that I think that as long as they can continue to profit from everyone else’s misery, the folks running things are very happy with what is happening.
Sam I Am says
I still see lots of posters on store windows saying their hiring. What I don’t understand is if these places are having trouble finding workers for unskilled positions, how can there enough people available to fill those jobs that require real skills?
Len Penzo says
No doubt about it: The businesses that need people with technical and vocational skills are in worse shape than the restaurants and bars.
Re: that tweet saying Ron Paul told him he thinks the gold in Fort Knox is gone … what does that mean for the US if there is no more gold when the dollar system finally dies?
Len Penzo says
Well, the US almost certainly has some gold in its vaults at Fort Knox, West Point, and the Denver Mint. But the less gold it has, the deeper the USD devaluation will be (i.e., an even higher USD price of gold will be required to balance the books).
The average adult DOES have just one testicle. Aren’t statistics grand?
p.s. – I am above average! 😉
One Ball Short says
Len Penzo says
🤣 🤣 🤣
Well played, Mr. Ball.
(And you too, Cowpoke!)
RD Blakeslee says
Anybody feel sorry for us old age-related geldings?
The Dark Knight says
You didn’t mention that the Fed said they are “probably” done raising interest rates. Let me fix that for them. They *are* done. Too bad interest rates need to be raised to at least 8% and maybe even 10% to flush the toilet and end these manipulated markets and our corrupt gubmint.
Len Penzo says
Can’t argue with that.
When they make the first rate cut, I expect to see the gold and silver prices really take off.
Thanks for another great round-up, Len. Can’t start my weekend without it.
Len Penzo says
James C Hendrickson says
Len – excellent work. I can see why your blog has staying power.
The only comment I’d add is that its not entirely clear if the compositional change of employment figures is due to politics. It might be. But that’s hard to demonstrate conclusively.
Its also true that how official statistics are calculated changes and evolved.
Len Penzo says
Thank you, James. And you may be right about the statistics.
But adding totally bogus figures such as the birth-death model to more concrete jobs figures and/or “seasonally adjusting” statistics – whether it is jobs, or housing sales, or anything else – then I know the fix is in and the data being presented for our consumption has been corrupted.
The government should ban seasonal adjustments in all of their statistics, just as they should ban the jobs report B-D model. Their only purpose is to obfuscate.
Paul S says
Sure, inflation and inflated stats are worrying, but watching political goofs blithely nearing the edge of the debt ceiling cliff is astounding theatre for non Americans. Really? Really? The money was already spoken for/spent in a duly passed budget but….. Read this week if it does not pass this time around, expect a 50% drop in stocks and other pile on effects. Meanwhile, China just brokered cooperation between Saudi Arabia and Iran….??? while the US cannot even agree to pay back lenders. This is the unbelievable.
Ideology vrs Common Sense behaviour. So many living beyond their means, so many in debt, all reflected in Govt policy and gridlock. Drive down any hwy or through any sub division and what do you see? Crazy sized homes and glitzy cars, all bought on time. Trucks, boats, campers, quads, and air travel at a whim. This is not a realistic or a normal human situation. Debt debt debt is not cured by one action of intervention. Bankruptcies always mean some folks got hosed. This what happens when consumerism is the real religion of choice.
Rant over. Planting extra spuds this year. 🙂 Just in case. Take care.
Len Penzo says
Great comments, Paul! I hope you’ll continue to use this blog as your sounding board every week.