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 …
Why is gold the unmentionable, four-letter word of economics? The answer is threefold: A misunderstanding of the role of money; a misreading of history; and finally, visceral revulsion to the notion that a metal can do a better job of guiding monetary policy than a gaggle of finance bureaucrats, central bankers and well-degreed economists.
– Malcolm Forbes
Every society is three meals away from chaos.
– Vladimir Lenin
Credits and Debits
Debit: Did you see this? Food banks across Ohio have seen a surge in demand, with some running at double capacity. Matt Habash, CEO of the Mid-Ohio Food Collective, reports that “Right now we’re running 47% higher in 2023 than we did a year ago, and it scares me to death. I thought it would drop after the pandemic but I don’t think there’s any end in sight.” Then again, you can bet a lot of the people who are lining up for those freebies are driving some very nice cars. So there’s that. Oh … and on a related note:
Debit: If you’re wondering why so many people in Ohio and elsewhere are reaching out to food banks, consider this: While the annual inflation rate slowed to 4.9% in April, government data shows that groceries are now 23% more expensive than before the start of the pandemic – which actually means that groceries are closer to 50% more expensive than before the start of the pandemic. Ironically, everybody already knows this except for the mainstream media’s go-to “top economist” …
Debit: In other news, I see the latest US Census data shows that 42% of Baby Boomers – those between the ages of 60 and 79 – have no retirement savings stored in a 401(k), 403(b), 503(b), or defined-benefit and cash balance plans. The Census data also revealed that just 44% of Gen X – those between 40 and 59 – have no retirement account. The good news is that the Social Security trust fund is in the peak of health. Oh, wait …
Debit: By the way, when it comes to American retirees’ primary source of income in retirement, 40% cite Social Security. The average monthly Social Security check to a retiree is now $1782, or about $21,384 annually. However, between 2016 and 2020, the average American household headed by someone aged 65 and up spent $48,791 per year, or $4066 per month – and that was before skyrocketing inflation. Does anybody else see a problem here? Me too. The good news is, every predicament has a solution. Well … at least for those who are truly determined to find one (Ed. note: the following video does not “freeze” … be patient!):
Credit: Speaking of retirement savings, a new Gallup poll has found that Americans’ perception that gold is the best long-term investment has nearly doubled, rising from 15% in 2022 to 26% today. The increase means gold has overtaken stocks for second position, behind real estate, which is down sharply from last year’s record-high 45% – but on par with the typical proportion selecting real estate between 2016 and 2020. See for yourself:
Debit: Of course, we are witnessing the inevitable financially unpleasant death throes of a fraudulent debt-based monetary system that was unleashed in 1971 after the US dollar’s (USD) anchor to gold was broken. Since then, deficit spending been allowed to run unchecked; as a result, it’s now on fatal “the business end” of an exponential debt curve. Unfortunately, the only way our brobdingnagian federal government can fund itself is by having the Fed act as the buyer of last resort for US Treasuries. As such, gold is now the only remaining way out of America’s current predicament.
Credit: So … how will our current, fraudulent USD-denominated debt-based monetary system finally come to an end? According to macro analyst Chris Powell, there are several possibilities. For example, he says “the system may end when a single country decides to exchange substantial amounts of US dollars and Treasury bonds for more gold — real metal — than is readily available. (Or) it may end when any country with a substantial (US dollar) surplus decides that it’s hedged with enough gold that it can afford the severe devaluation of its dollar-denominated reserves.” I guess one can hope. Until then …
Credit: However, we think Powell’s third alternative is the most likely scenario, if only because it has happened before. As Powell puts it, the current monetary system “ends as part of a plan by major central banks to avert the catastrophic debt-induced deflation that now threatens the world. A plan to inflate the debt away – essentially to default on it – by devaluing the major currencies against gold.” Er … assuming the US still has its gold. Otherwise, things are going to get ugly. Just ask this guy:
Credit: Unfortunately, this scenario will probably not be utilized until the economic situation becomes dire. Why? Because, as macro analyst Jim Rickards notes, “no one in power wants to recognize the role of gold as a monetary asset. They don’t want anyone to even talk about gold, except as a ‘barbarous relic’ that belongs in the dustbin of history.” Uh huh. Until then, we’ll continue to experience the current death spiral of higher deficits, more inflation, and a growing proportion of government revenues being allocated to service a debt load that’s increasing at an exponential pace. And although it doesn’t feel like it, America’s day of reckoning is almost here …
Debit: So why do those in power insist on avoiding any serious discussions about fixing the monetary system? The answer is: Because the solution – devaluing the dollar against gold – will have some unpleasant consequences in the form of reduced purchasing power for greenbacks. That, in turn, can wipe out nest eggs built over decades of hard work; it also will lead to a lower standard of living for those of us who get paid in US dollars. Needless to say, the folks living in Zimbabwe already know this, literally and figuratively:
Credit: The good news is fiscally prudent individuals who protected their wealth with precious metals prior to a currency devaluation will see the purchasing power of their nest egg not only remain unscathed, but potentially end up higher than it was before the crisis unfolded. Such is the nature of wealth insurance.
By the Numbers
Here are the five states whose residents are the closest – and furthest away – from their respective states’ recommended final retirement savings figure:
50 Hawaii (average savings shortfall: 80%)
49 New York (70%)
48 California (63%)
47 Massachusetts (59%)
46 Oregon (57%)
5 New Mexico (28%)
4 Michigan (27%)
3 Georgia (24%)
2 Iowa (20%)
1 Kansas (17%)
Last Week’s Poll Result
Which would you rather find?
- $10 million (59%)
- True love (41%)
More than 1900 Len Penzo dot Com readers answered last week’s poll question and it turns out that almost 3 in 5 would rather find $10 million than true love. Curiously, I’ve featured this poll question four times since 2018 and the percentage of people choosing the cash over true love has been steadily increasing. In 2018 the percentage who preferred the money was just 43%. In 2021 the figure climbed to 51%. And last year, the cash lovers comprised fully 57% of the respondents. Does anybody have any thoughts on this? If you do, let everybody know in the comments below!
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
Useless News: Fun at the State Fair
Stumpy and his wife Martha went to the state fair every year.
Every year Stumpy would say, “Martha, I’d like to ride in that there biplane.” And every year Martha would say, “I know, Stumpy, but that biplane ride costs $10, and ten dollars is ten dollars.”
One year, Stumpy and Martha went to the fair and Stumpy said, “Martha, I’m 75 years old. If I don’t get a ride in that biplane this year I may never get another chance.”
Martha replied, “Stumpy, that there biplane ride costs ten dollars, and ten dollars is ten dollars.”
The pilot overheard the old couple and said, “Folks, I’ll make you a deal; I’ll take you both up for a ride. Now … if you can stay quiet for the entire ride and not say one word, then I won’t charge you — but if I hear so much as a peep, then it’s $10.”
Stumpy and Martha agreed to the pilot’s terms and up they went.
The pilot did all kinds of twists and turns. Then he did several barrel rolls and a couple of dives, but not a word was heard. So the pilot did all of his tricks over again.
Still, not a word.
After they landed the pilot turned to Stumpy and said, “By golly! Mister, I did everything I could think of to get you to yell out, but you didn’t make a sound.”
Stumpy replied, “Well, I was gonna say something when Martha fell out, but ten dollars is ten dollars.”
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. Ontario (2.11 pages/visit)
2. Nunavut (2.00)
3. Prince Edward Island (1.80)
4. Alberta (1.78)
5. Nova Scotia (1.67)
9. New Brunswick (1.44)
10. British Columbia (1.41)
11. Newfoundland & Labrador (1.40)
12. Saskatchewan (1.33)
13. Manitoba (1.27)
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(The Best of) 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
After reading my article explaining why waterbeds are for suckers, Trisha let me know that she disagrees:
Best. Sex. Ever. The water is a huge assistance in getting the groove right …
Trust me – you can get the same results by playing a few Barry White tunes.
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Photo Credit: stock photo