Black Coffee: Are We Having Fun Yet?

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 …

Be patient and tough; someday this pain will be useful to you.

– Ovid

The waiting is the hardest part.

– Tom Petty

Credits and Debits

Debit: Did you see this? While the government continues to insist the US economy is booming, there are many economists who say we’re in a recession. The first sign occurred last year, when US GDP fell for two consecutive quarters. In the past, that was the broadly-accepted official indicator; but like many other things nowadays, those in charge unilaterally changed the textbook definition to suit their narrative. Even more glaring is the Treasury bond yield curve, as every inversion has predicted a recession with 100% accuracy. The current “10/2” curve has been inverted since early 2022 and is the worst since 1980. But, hey … the thought police says “nothing to see here.”

Debit: Digging into the numbers, I see that all-cash US home sales plunged 18% year-over-year in May 2023. This is regardless of how they were purchased, as sales plunged 26% in the West, 21% in the Midwest , 25% in the Northeast and 17% in the South. Despite those figures, last month the median year-over-year price of previously-owned US homes fell just 3.1% to $396,100. That’s the fourth consecutive month of year-over-year declines, and the largest since December 2011. So … is the housing market finally beginning to crack? If it is, the usual suspects sure seem to be doing their best to hide it.

Debit: Of course, homes are still unaffordable. In fact, despite falling prices, the median American household needs to spend more than 40% of their income to afford the median priced home –  that’s up from 28% three years ago, which is actually a bit lower than the traditional 30% rule of thumb. It’s also just below the 2006 peak of 42% that signaled the popping of the last big housing bubble and follow-on housing-market downturn that ran through 2011. Don’t tell that to realtors though; most of them insist that despite higher interest rates and prices still near all-time highs, it’s the best time ever to buy a home.

Credit: By the way, there’s a growing number of people beginning to wonder why, as Wall Street on Parade points out, “every trading veteran on Wall Street (isn’t) scratching their head and asking themselves the same question: Why aren’t we hearing about interest rate derivatives blowing up and taking down either a US mega bank or its counterparty on the wrong side of the trade?” Well … it’s quite simple, really: accounting fraud. And if you’re wondering why the banks responsible for perpetuating this fraud aren’t being punished, that answer is quite simple too: the government is in on it. But that’s par for the course these days …

Debit: Speaking of accounting, the number of weekly corporate bankruptcy filings has been spiking since the start of the year. Must be the “booming” economy. Heh. And on a related note, federal debt is surging too. In fact, the $32 trillion National Debt is $700 billion higher today than it was just three short weeks ago. No, really. And if you toss in unfunded liabilities – including Medicare, Social Security, and federal employee benefits – that number is almost $200 trillion. With that in mind, here’s a quick pictorial representation that perfectly illustrates just how big a trillion dollars really is:

Debit: Needless to say, if you couple more than $200 trillion of debt on – and off – the books with America’s decision to weaponize the USD against nations that fail to kowtow to US policies, then it’s easy to see why more and more countries are beginning to recognize that the USD-centric debt-based monetary system is no longer in their best interests. Not that the powers-that-be really care …

Credit: Frankly, it’s no wonder that, according to macro analyst James Rickards, the so-called BRICS countries will announce the creation of a new currency at its annual leaders’ summit conference in late August. Not surprisingly – and even more importantly – Rickards also notes that it’s very likely this new currency will “take direct aim at the dollar” by linking it to a weight of gold. Imagine that.

Debit: If the BRICS do indeed introduce a new gold-backed currency later this summer, Rickards says that the new currency will result in “the biggest upheaval in international finance” since Richard Nixon broke the USD’s anchor to the yellow metal in 1971. “Quite simply,” Rickards warns, “the (West) is unprepared for the shockwave.” Uh huh. And this is despite years of warning signs – at least for those who have been paying attention. If only the mainstream media would do more to ensure people are fully aware of what’s happening:

Debit: So what, exactly, can we look forward to here in America if the BRICS actually do launch a new gold-linked currency? Well … Rickards says you can start with “higher inflation and a much higher dollar price for gold.” Just don’t tell that to Wall Street – or any other die-hard members of the fraudulent fiat monetary system fanbase …

Credit: For his part, macro analyst Matthew Piepenburg says that he “sees currency debasement as mathematically and historically inevitable, although nobody has any clue as to the precise trigger or date that the already-teetering fiat money system falls over the global debt cliff. We only know we’re racing toward it at historical speed, with equally historical consequences.” It sure seems that way, and yet the system has been more resilient than the Energizer Bunny.

Credit: One thing is certain: At some point, the debt math will simply overwhelm central banks’ ability to hide the fact that their currencies are no longer a viable medium of exchange, let alone a store of value. So how can you protect yourself? Let’s go back to Mr. Rickards, who says, “There’s a simple solution to this coming currency crisis: buy gold. It will preserve your wealth and protect you from inflation. You can always sell it if you need cash; you’ll just get more cash than what you used to buy it. That’s what the BRICS are doing; it’s time to hop on the BRICS bandwagon.” Or you can keep faith in the USD. The choice is yours.

By the Numbers

Here are the average 30-Year mortgage rates in America by decade:

8.9% The average 30-year mortgage rate in the 1970s.

12.7% The average 30-year mortgage rate in the 1980s.

8.1% The average 30-year mortgage rate in the 1990s.

6.3% The average 30-year mortgage rate in the 2000s.

4.1% The average 30-year mortgage rate in the 2010s.

4.2% The average 30-year mortgage rate in the 2020s.

2.65% The all-time low 30-year rate reached in January 2021.

6.7% The current 30-year mortgage rate.

Source: @CharlieBilello

The Question of the Week

[poll id="481"]

Last Week’s Poll Results

When was the last time you went shopping at an indoor mall?

• Within the last decade (43%)
• Within the last year (41%)
• More than a decade ago (10%)
• Within the last month (6%)

More than 2000 Len Penzo dot Com readers responded to last week’s question and it turns out that slightly more than half of you haven’t been shopping in an indoor mall in more than a year. Frankly, I’m surprised that number isn’t a lot higher than that with all of the dead malls in America these days. As for yours truly, I can’t remember the last time I visited an indoor mall – and I have a couple of fairly busy ones not too far from my house, including the one that served as the “Twin Pines Mall” in Back to the Future.

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: Friendly Advice

(h/t: The Honeybee)

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 my article on the most common birthdates, Gina shared this:

I have family members born on September 14th, 16th, 19th, 20th, 21st, 25th, 26th and 30th.

Well, Gina … I think it’s safe to say we all know how your family likes to ring in the New Year. 

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