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 …
Forget about style; worry about results.
– Bobby Orr
The pickpocket is usually very well dressed and of prepossessing appearance.
– Harry Houdini
Trendy is the last stage before tacky.
– Karl Lagerfeld
Credits and Debits
Debit: Did you see this? After two consecutive years of negative real wage growth resulting from high inflation, households have been depleting their personal savings and racking up enormous amounts of credit card debt while paying some of the highest interest rates in a generation. As a result, lower-tier consumers are now cracking under the weight of high food, shelter, and energy prices. In fact, some consumers have become so stretched that they’ve been forced to trade down grocery shopping from Walmart to Dollar Tree.
Debit: Frankly, it’s hard to enough to make ends meet when inflation has resulted in real wages falling uninterrupted for the last two years. It’s even harder to pay the bills when the economy is struggling to provide enough work for its citizens. As for those who insist that the economy has been booming for the last two years, please explain this:
Debit: On a related note, one of The Fed’s favorite inflation indicators – the so-called core personal consumption expenditures (PCE) deflator – rose 4.6% in May, indicating that it’s still hovering at very high levels. The good news is headline PCE fell to 3.8% – that’s the first time it has been below 4% since April 2021. Even so, the latest data also shows that inflation-adjusted personal spending was unchanged in May. So … is the consumer starting to pull back? Doesn’t seem that way, as stalling spending combined with sticky core PCE – smells like stagflation. But don’t worry, the Fed has everything under control. Or not …
Credit: By the way, last week Jerome Powell was at a conference in Portugal that was attended by lots of other sharp-dressed men and women. That prompted the always-sagacious Franklin Sanders to ask the following questions: “Ever wonder what central bankers do at a conference? Circle up their chairs and pull the wings off flies? Tie burning sticks to cats’ tails and let ’em loose? Unlimber their BB guns on mockingbirds? Stomp on toads? The thought staggers my imagination.” Mine too, Mr. Sanders. Mine too.
Debit: One thing we do know is that Powell said at the conference that the world’s central banks were committed to getting inflation back under control. Yes, the same central banks that were responsible for unintentionally unleashing the inflation genie from the bottle. In the meantime, others are taking matters into their own hands …
(h/t: r/WallStreetSilver u/BoatSurfer600)
Debit: Of course, we all know the Fed will never be able to fix the inflation problem because there is far too much debt in our debt-based monetary system to ever recover; the system is destined to implode. And relatively soon. As for those of you who insist that more taxes can fix things, well … cool story, Bro. But the reality is this: the government has a spending problem – not a revenue problem.
Debit: In other news, it appears that American banks’ usage of the Fed’s emergency Bank Term Funding Program (BTFP) facility is at a new all-time high, and yields are rising even more. If so, it suggests that banks’ mark-to-market losses are continuing to grow. In fact, banks’ usage of the BTFP rose again last week to a new record at $103 billion. So is the banking crisis truly contained? Or is this simply the calm before the next financial storm?
Credit: The good news is the Fed says the 23 largest US banks just passed every one of their stress tests. So relax, Nervous Nelly – there’s absolutely nothing to worry about. This should be particularly comforting news for anybody who is worried about the potential unraveling of the entire financial system. Why am I so confident? Because the Fed is guided by a battalion of the greatest economic minds on Earth, with plenty of real-world experience to boot. Oh, wait …
Credit: Speaking of unraveling systems, currently 36 nations – representing 33% of global GDP and 64% of the world’s population – have expressed an interest in converting over to the proposed BRICS alternative currency, which is anticipated to be officially introduced in late August. However, as macroeconomist Alasdair Macleod points out, this economic bloc “is much bigger than America or the EU. Yet nobody in the West seems to actually understand the importance of this.” Probably because nobody is paying attention. But that’s okay; I’m sure the mainstream media will get right on this. I know … but just play along.
(h/t: u/BoatSurfer600)
Debit: Meanwhile, the World Economic Forum (WEF) held a conference in China this week where an Ivy League economist extolled the convenience and other “virtues” of central bank digital currency (CBDC) expiry dates and restrictions on “less desirable” purchases. For example: “You could have a potentially better … world where the government decides that (CBDCs) can be used to purchase some things, but not other things … like ammunition, drugs, or pornography.” Ooooo! Sounds like Utopia! And yet, not on his list: political graft, bribes to government officials, and Ivy League college tuition. Imagine that.
Debit: What’s that? You say government inherently has its citizens’ best interests at heart? Well … try telling that to British politician Nigel Farage and others who, after years of failing to follow the sacred globalist-politician playbook – are now banned from having a bank account at any financial institution in the UK; no CBDCs required. Oh … and speaking of someone not following the playbook:
Credit: As always, the bottom line here is that a small amount of physical precious metals held in your possession offers, if you’ll excuse the pun, rock-solid refuge from all forms of monetary and financial system turmoil. That includes intentional – not to mention previously inconceivable – upheavals such as those currently being experienced by Mr. Farage and others.
The Question of the Week
[poll id=”482″]
Last Week’s Poll Result
Should workers be allowed to opt out of Social Security?
- No (49%)
- Yes (42%)
- I’m not sure (9%)
More than 1800 Len Penzo dot Com readers responded to last week’s question and it turns out that almost half of you think workers should not be allowed to opt out of Social Security. Frankly, I am a bit shocked at those results. Whether you voted “yes” or “no,” I would love it if you share your reason why in the comments below!
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.
An investors’ guide to finding affordable, desirable international homes under $150,000 — yes; under — was recently released. Here are the top eight locations that were chosen not only for their affordable housing market, but also their attractive local settings:
8 Montemor-o-Velho, Portugal
7 Olargues, France
6 Gragnana, Italy
5 Senija, Spain
4 County Galway, Ireland
3 Salinas, Ecuador
2 Las Terrenas, Dominican Republic
1 Nuevo Arenal, Costa Rica
Source: Ronan McMahon
Useless News: The Grieving Man
A groundskeeper at a Catholic cemetery noticed an elderly Irish man weeping loudly in front of a grave. It was near closing time, so he had to politely ask him to leave for the night.
“It’s just not fair. Why did you have to die and leave me here?!” the man was shouting as the groundskeeper approached.
“Well, we have to trust God’s will. Tell me, was this a family member?” the groundskeeper asked.
“No.”
“A beloved friend?”
“No. I never even met him.”
“Then why are you so sad about his untimely death?”
“He’s my wife’s ex-husband.”
(h/t: Quia Possum)
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. Vermont (2.56 pages/visit)
2. Wisconsin (2.55)
3. Alaska (2.33)
4. South Carolina (2.32)
5. Arkansas (2.26)
46. Minnesota (1.45)
47. Washington (1.44)
48. Iowa (1.31)
49. Oregon (1.30)
50. Wyoming (1.26)
Whether you happen to enjoy what you’re reading (like my good friends Ben & Jerry in Vermont …) — or not (ahem, Wyoming …) please don’t forget to:
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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 last week’s article highlighting so-called rules of thumb that are actually old wives’ tales, Cameron Marvel left this comment:
“Years ago, some famous celebrity (Zsa Zsa Gabor, Elizabeth Taylor, Joan Collins?) was asked about the two month salary rule for an engagement ring. She said that a man should buy as nice a ring as he can afford, because being broke isn’t sexy.”
I wonder if the large number of young able-bodied men these days who would rather live in their parents’ basement than work know this.
offee 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
Good morning Len, I hope your Independence Day was a good one!
Re: your Social Security question, I ALWAYS prefer the option of deciding for myself if something’s a good idea for me and my family. I’d would prefer an option of handling my own SS funds and health insurance.
In other news, my 93 yr. old dad is shocked at food prices and glad he lives with us now to save on housing bills. Makes me wonder how other seniors are managing these days.
Hi Lauren! Yes, food prices are crazy. I wince every time the Honeybee and I go grocery shopping. Thankfully, we love leftovers, so we get the absolute most from what we buy.
simple search:
Since 1450 there have been six major world reserve currency periods. Portugal (1450–1530), Spain (1530–1640), Netherlands (1640–1720), France (1720–1815), Great Britain (1815–1920), and the United States from 1921 to today.
Rise of BRICS timeline and demise of the Dollar, looks about right on schedule to see a change. However, BRICS is a basket of basket cases for the most part. I could see a group of several currencies being used.
20 + years ago I attended a presentation given by an English historian on current affairs (forget his name right now) and I asked him during question period about what he thought about the decline of the US dollar reserve and a decline of general dominance/hegemony in world affairs.
His reply: “Look at my country. The sun never set of the British Empire. We survived. They’ll get over it”.
Big time belt tightening on the horizon against a backdrop of anger and whining could be coming. However, look at the plus side. The US has ample domestic energy supplies (for now), arable land, ability to move water around, and an education system that could be leveled and more accessible/fair with a little political will.
A few questions. Is there individual and collective will to put the shoulder to the wheel as need be? Will the sense of entitlement dissipate? Or will the 1% figure out a way to keep the spoils at the expense of most (pun intended) and further divide the Country. And most important, can people just bloody well get along and share the load?
Look for more food carts and fewer restaurants. 🙂 etc etc
When the dollar loses reserve currency status there will certainly be a standard of living adjustment here in the US. However, as I have maintained all along, that will result in a big portion of the US manufacturing base that has been off-shored returning to America (because import prices will necessarily rise, ending the “cheap-imports” paradigm). As that base grows, US living standards will rise again.
If the US is smart and reintroduces gold specie, living standards will return to the former glory days where the government bureaucracy was much smaller, and a single blue-collar worker’s income could buy a home, with a couple of cars in the garage, support a family, enjoy a nice annual family vacation and send the kids to college.
On the other hand, if it sticks with a fiat currency system, most of the spoils will continue to be shunted to our bloated government.
“And yet, not on his list: political graft, bribes to government officials, and Ivy League college tuition.”
Biting commentary that hits the target, Len. CBDCs are all about government control over its citizens. 99% of all university professors are perfectly fine with that. The noose is growing tighter on us.
Yes, it is, Cowpoke. I think most of us can feel it too.
Hi Len,
Thanks for another delicious cup!
I said yes on the Social Security questions too. I am pretty certain I would be far better off if I were allowed to invest the 6.5% that was pulled from my paycheck every month as I saw fit.
Now I’m not sure I’ll ever receive a SS check before I am old enough to start collecting them!
Have a great weekend everybody!
Sara
Hi Sara! I’m still 11 years away from the date I plan on drawing my first SS check and, while I am certain I will receive it, I’m not so sure the purchasing power I’ll being getting is what I am currently being promised.
I said no on the SS question. I collect it now and I figure that the system would collapse if everybody starting opting out.
I said “no” for the same reason.
Hi Len, I would have opted out of SS in a second If I could have. But where I live in northern Michigan, there are mostly working poor making at most $20 an hour. If they weren’t forced to pay SS they would save nothing for retirement. Then the government would have to support them anyways. We are retired now and having put in max SS during our prime working years, we receive the maximum from SS which we can easily live off of. So I voted to make it mandatory to protect people from themselves.
On the one hand, I think protecting others from themselves makes a lot of sense, Rick. Then again, the personal responsibility side of me though keeps asking why I should be significantly penalized because others are poor planners. For the self-employed, confiscating ~13% of income for the entirety of one’s working career is a significant penalty. Thankfully, most people get everything they paid into the system within four or five years – assuming they live long enough. Of course, that discounts the potential returns they could have earned over the years if they had, say, stuck that money in a simple S&P500 index fund, or something similar.
I strongly agree with Rick especially since we see there is very little teaching of basic personal finance in our middle and high schools. It is not a requirement for all. If we think our kids are in trouble because the can not read at grade level imagine the problems if they will have without basic personal finance education. We need the forced payment of SS for some to survive. My years assisting folks of all ages with charity assistance makes it clear that we must teach these basic skills and the sooner the better.
Can I be honest here? Im really tired of this shit. And I’m even more tired of politicians that make 10x or 100x what I make. People talk about low birth rates these days. It doesn’t take a genius to know that’s because people can’t afford them!
The days of one man working to support a house and a family are gone. These days married couples who both work can barely get by.
What’s the point of working and trying to save when inflation is so messed up that I will never be able to save enough to matter?
Hang in there, R. If the US dollar loses reserve currency status – and the US returns to a monetary system that is credibly tied to gold – the working man will once again be able to fully support a family on his own. Even better, government will shrink substantially – as will the graft and corruption that has made many politicians these days very very wealthy.
The Fed tool department isn’t completely empty. Isn’t that a screwdriver on the rack to the right? It’s not a hammer, but still better than nothing.
Yeah, that screwdriver is for the government to put the final screws to us – like emptying our 401ks to support them
LOL! Very astute observation. 🙂
You’ve got an eagle eye, Sam!
Re SS:
The consequences of not having SS would be dire. As this blog accurately points out, the middle class–and especially the lower middle class–are squeezed and often unable to keep their heads above water. If workers were able to opt of SS, they would just to make ends meat. While this sounds nice, the economic realities would mean that most approach retirement without any dependable income stream. From a purely selfish standpoint–this in untenable. My city already has a huge homeless population due to the twin blows of the opioid epidemic and the high cost of housing. If we now had to provide housing or flood our parks with everyone over 60 the quality of life would plummet.
We could also chat about Social Security disability, which isn’t a program I have a good grasp of, but my perception is that it overwhelmingly benefits the rural (former) working class.
For comparison, look at other countries that don’t have social security. Generally speaking their poverty rates are double ours (big caveat here: how do poverty thresholds translate between countries?).
Look at countries with more generous retirement schemes than ours. Do they have higher or lower rates of old age poverty? What about prime-age work force participation?
Re: Homelessness. This is entirely a problem of the government’s own making. It is a fact that the government gets more of whatever it subsidizes – be it green energy, ethanol, drug use (via needle distribution programs), cannabis use and, yes … homelessness. We can thank the Homeless Industrial Complex for that; it’s a multi-billion dollar scam that only serves to expand an ineffective highly-paid government bureaucracy.
As for SS keeping the majority of US seniors from eating cat food in their older years, one has to ask how the US managed to avoid that fate prior to the program. The answer, of course, was that the majority of US seniors didn’t live in poverty prior to SS. A big reason for this was, prior to SS, most people didn’t retire – or at least retire for long prior to death. And those who did anticipate retirement, were able to save with a US dollar that maintained its purchasing power over many many many years – which allowed their savings to grow at “normal” interest rates.
Also in response to the Twitter thread, how quickly we forget our history. Yes, we were on the verge of WW3 and economic collapse. We were in the midst of the cold war, and the late 70s saw hyper inflation and 9% unemployment. The unemployment rate got even worse in the 80s.
I voted to opt out of SS. About 15 years ago I wrote to the IRS and asked them if we could just call it square. By that I mean they could keep what they’d taken, but I’d be allowed to opt out of all future contributions (and any future SS checks of course).
They actually wrote back to me with an explanation why opting out was not an option! They explained why, but I can’t remember the legal logic.
Very interesting, Carpe DMX! I wish you kept that letter.
I said I would opt out of Social Security in a heartbeat. The government shouldn’t have a stake in my retirement or anyone else’s. Act like a grown up and plan for your future yourself. Instead we’re stuck with this system that is badly mismanaged and on the verge of going bust.
I think it’s a necessary evil, so I said no opt out option.
When I was in my twenties, I wasn’t a disciplined investor. I made and lost money on single stocks. I bet at least half of Americans are so financially undisciplined that they would be destitute in retirement without the forced savings of SS.
I don’t like SS, but it’s a reality and it’s far from the worst thing done with tax money.
You’re not alone in that thinking, Martin.