Black Coffee: Master and Servants

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 …

All great empires die from within.

– Terry Bradshaw

A business that makes nothing but money is a poor business.

– Henry Ford

In a change of government, the poor change nothing but the name of their master.

– Aesop

Credits and Debits

Debit: Did you see this? A whopping 8 million Americans currently live in a household that is behind on paying rent. And, apparently, it’s not just renters – a growing number of homeowners are having similar problems …

Debit: Maybe that’s why employees from Target’s downtown San Francisco store told the San Francisco Standard that they’re experiencing at least 10 thefts a day, the nanny-state politicians in the Golden State have introduced a new bill that would make it illegal for store employees to confront shoplifters – who are already encouraged by another state law that makes store thefts under $950 a misdemeanor. The world has truly lost its mind – and nowhere is that more apparent than in my home state of California.

Debit: Meanwhile, it turns out that had the FDIC not stepped in, Silicon Valley Bank would have lost 85% of its deposits over a two-day period in March. But if you think that’s bad, consider this: Silicon Valley Bank wasn’t even on the “Problem Bank List” maintained by the Federal Deposit Insurance Corporation (FDIC) at the time. It kind of makes you wonder who is actually running the show over there. Although if I was a betting man, I’d strongly suspect two of them are right here …

Debit: In other news, inflation is decelerating, but prices are still climbing at an uncomfortable pace. How uncomfortable? Well … the media gushed that the CPI for May came in at “only” 4.0%. But no matter how DC politicians and the mainstream media try to spin the inflation narrative, they can’t spin this: Inflation has now outpaced wage gains for the 26th straight month. Put another way: Americans’ living standards have been steadily declining for more than two years. The again, most Americans didn’t need the latest government inflation report to know that.

Debit: Speaking of DC politicians, with the latest debt ceiling theater now officially over, Congress is considering a new bill that would only authorize payment suspensions on government debt if lawmakers in both chambers were to pass a veto-proof resolution of disapproval within 30 days of blowing through the debt cap. The only good news is that some government officials are beginning to acknowledge where this is headed – even if they did so accidentally in a “senior moment” …

Debit: Hey … here’s a fun fact: Turkey is one of only two countries in multiple continents (the other is Russia). Here’s another fact about Turkey: It’s currently in the middle of a hyperinflation event. How bad are things getting there? Well … this bad: Over the past 25 years, the amount of lira needed to buy an ounce of gold is now up 41,000,000%. (Yes, those are both commas; no decimal points.) And for those interested in a shorter timeline, consider this: Gold priced in Turkish lira is up more than twenty-fold since 2010. It’s the same story for the Lebanese lira too, which has been plagued by hyperinflation since 2019. Check out this recent restaurant bill in Beirut:

Credit: Ironically, as the purchasing power of the Turkish lira continues to plummet, the amount of gold (and silver) required to buy assets like houses and other real estate is also plunging. Surprised? You shouldn’t be. Those plunging home prices in terms of gold and silver offers a textbook real-word example of how precious metals act as wealth insurance in the presence of a failing fiat currency. In fact, during the Weimar hyperinflation event in the early 1920s, prudent Germans discovered they could buy a very nice townhome in downtown Berlin for a single ounce of the yellow metal. Meanwhile, back here in the US …

Credit: Needless to say, the US would be in the same boat as Turkey without the exorbitant – albeit tenuous – privilege of having the US dollar as the premier global reserve currency. Macro analyst Matthew Piepenburg notes that America’s debt problem is so bad that “a desperate Janet Yellen has no choice but to rely on the last resort of issuing more T-bills.” But at this point, Piepenburg calls that purely palliative care, as “Uncle Sam’s debt cancer is fatal and (therefore) can’t be cured with more bonds.” Okay … but don’t tell that to the Fed.

Debit: Unfortunately, America’s negative fiscal prognosis is the result our fraudulent debt-based monetary system now being on the business end of an exponential curve – which means, when it comes to hyperinflation, the transition from “gradually” to “suddenly” isn’t too far off into the future. Scoff if you wish, but both the M2 currency supply and the Fed’s balance sheet confirms this so undeniably that even Stevie Wonder can see it.

Credit: As economist Daniel Oliver of Myrmikan Research points out, the Fed has essentially lost control of the monetary system and warns that it won’t be long before asset prices begin falling at the same time inflation continues to painfully increase basic living costs. “This phenomenon strikes all inflationary economies eventually,” he says, “and it makes the middle class poor fast.” Uh huh. It’s like a bad magic trick – which is why I’m sure we’d all be much better off if this guy was running the Fed …

Credit: Of course, as Egon Von Greyerz reminds us: “When you’re talking about the whole global financial system, the … only protection is to be outside of it in the form of real assets. This means you can’t buy future derivatives or instruments within the same system. And that’s why we decided that real gold was the best protection.” In the meantime, the clock keeps ticking:

Credit: Not surprisingly, Mr. Oliver comes to the same conclusion, saying that, “we can acknowledge the situation is hopeless and yet be determined to preserve our own capital. Capital will seek safe-havens with ever more urgency, the preeminent being (physical) gold. Those who get there first will fare the best.” As for everyone else, well … let’s just hope they’ll still have enough working years left to rebuild their nest eggs.

By the Numbers

Here are the current year-over-year inflation figures for select goods, services and commodities based on the latest government consumer price index (CPI) data:

-19.7% Gasoline

-11.0% Natural gas

-4.2% Used cars

-0.1% Medical care

+4.7% New cars

+5.8% Food at home

+5.9% Electricity

+8.0% Shelter

+8.3% Food away from home

+10.2% Transportation

Source: @hkuppy

Last Week’s Poll Result

How much are your average monthly non-discretionary expenses?

• Less than $2000 (47%)
• $2000 to $3000 (28%)
• $3001 to $4000 (12%)
• $4001 to $5000 (7%)
• More than $5000 (6%)

More than 1900 Len Penzo dot Com readers answered last week’s poll question and it turns out that almost half of you have average monthly non-discretionary expenses of less $2000. If I had to guess, that’s because many of those folks are fortunate enough to own their home free and clear. On the other hand, slightly more than 1 in 8 of you spend more than $4000 on rent, food, utilities and other living expenses.

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="479"]

Useless News: Buddies Until the End

Two friends had agreed that if one of them should be dying, the other would be there for the other’s final moments. Unfortunately, Joe died before Frank could get to his bedside. As a result, Frank was really upset and started going to as many seances as he could in a desperate attempt to make contact with his departed friend.

Sadly, the first 29 seances were complete failures – but Frank was undeterred. Upon attending seance number 30, Frank finally got in touch with his ol’ buddy …

“Joe? Is that really you?”

“Yes it is, Frank.”

“And how are you, Joe?”

“I’m great, Frank! I sit in the sun most of the day, and go for regular swims. There’s also lots of free sex and free food.”

“Joe, I’m so happy you’re an angel in heaven!”

“Frank, I’m not an angel in heaven.”

“You aren’t?”

“No, Frank; I’m not.”

“Then where are you, Joe?”

“I’m a duck in Central Park.”

(h/t: Peter Pan)

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 (2.22 pages/visit)
2. Quebec (2.10)
3. Newfoundland & Labrador (1.78)
4. Alberta (1.71)
5. British Columbia (1.64)

9. Yukon (1.50)
10. Northwest Territories (1.33)
11. Manitoba (1.27)
12. Saskatchewan (1.22)
13. Nunavut (1.00)

Whether you happen to enjoy what you’re reading (like those crazy canucks in Ontario, eh … for the second month in a row!!!) — or not (ahem, you hosers living on the frozen Nunavut tundra) — 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 so much!!!! 😊

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 last week’s article on the ethics of keeping found money, Chester summarized his own thoughts on the matter:

The government finds no remorse in stealing from taxpayers. Politicians find no remorse stealing from their constituents … And considering the government has stolen almost $75,000 from me during my lifetime, I say ‘finders keepers.’

Can I get the name of your accountant? If you ask me, you’ve gotten off pretty cheap.

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: stock photo