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 …
Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.
– Ronald Reagan
If money is your hope for independence you’ll never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.
– Henry Ford
Credits and Debits
Credit: Did you see this? Consumer prices rose at the slowest pace since March 2021 as inflation continued its long cooling trend in June. The Consumer Price Index (CPI) rose 0.2% over last month and 3% over the prior year in June. That’s a slight acceleration from May’s 0.1% month-over-month increase – but it’s a slowdown compared to the month’s 4% annual gain. Even so, inflation is still officially running at an unacceptable pace, as Americans are now apparently skimping on hygiene products to help make ends meet. No, really.
Debit: On a related note, a new survey has found that 72% of Americans say they aren’t financially secure – compared to only 28% who say they are. So what would it take to change that? Well … those same Americans say they would need to earn, on average, $233,000 a year to feel financially secure and $483,000 annually to feel rich – which leads me to believe that most of those people live in California. For your consideration, here is Exhibit A:
How to handle a slob roommate.
Debit: As one might expect, both amounts that the survey respondents said they’d need to feel financially secure and wealthy are significantly higher than the average earnings of a full-time, year-round worker in 2021, which the US Census Bureau says was about $75,000. Ironically, the survey responses also revealed that the more money Americans make a year, the more they said they need to feel both comfortable and rich – more proof that lifestyle creep is a very very real phenomenon.
Debit: Not surprisingly, the survey also found that 63% of respondents blamed high inflation for their financial troubles, while 48% blamed the economic environment more broadly and 36% cited rising interest rates. You can bet high mortgage rates are causing a bit of angst too. Although when it comes to mortgage rates, “high” is a relative term. Take it away, Phil …
Debit: Of course, one of the biggest contributors to the current inflation scourge is runaway federal spending. So … just how out of control is the latest spending spree? Well … consider this:
Credit: Needless to say, there is a strong relationship and clear long-term trend between the price of gold and the US National Debt. Less apparent, but just as important is the normally-quiet relationship between gold and confidence in the global debt-based fiat monetary system – although getting a central banker to admit it is like pulling teeth.
Credit: Meanwhile, Wolf Richter points out, “we’re just at the beginning of a massive structural change – not a temporary blip – that is impacting office towers; turns out, companies have figured out they won’t ever need this vast amount of vacant office space.” This is based on skyrocketing commercial mortgage backed security (CMBS) defaults, which have just seen the fastest six-month spike in data going back to 2000. Meh. It’s probably nothing. After all, haven’t you heard? The economy is 🔥 !!!!
(h/t: prompts.finance)
Debit: By the way, who are the largest CMBS holders? Well … that would be US regional banks. Yes; the same regional banks that were blowing up earlier this year thanks to rising Treasury bond rates. Remember that the next time officials tell you the regional bank crisis has been contained.
Credit: In other news, it’s looking increasingly likely that a version of the gold standard is coming for nations that comprise roughly two-thirds of the world’s population. Thorsten Polleit, chief economist at Degussa Bank, said that while the announcement is a step in the right direction, there’s still a long way to go to before it becomes reality. “At first glance,” he says, “a new (currency) backed by gold could be a major challenge to the US dollar’s hegemony.” What he didn’t say is that if this new BRICS currency is successful, it would result in a sharply-lower living standard for today’s middle-class Americans. Well … unless you listen to this economist …
Credit: However, to be fair, Mr. Polleit also noted that the devil is in the details. He pointed out that no currency is truly “gold-backed” unless it’s convertible by the public on demand – that is, via legal-tender gold specie circulating within the economy. “Using gold as money,” he says, “would be a game changer. But it could lead to a sharp devaluation of fiat currencies vis-à-vis the yellow metal, thereby catapulting goods prices in fiat-currency terms, shocking the global fiat monetary system. I’m just not sure if this is what Brazil, Russia, India, China and South Africa have in mind.” Nor does anybody else; only time will tell.
(h/t: WallStreetSilver u/wisdompuff)
Credit: So … as our fraudulent fiat monetary system continues to unravel, with global debt continuing to expand to unimaginable – not to mention unsustainable – levels, gold will increasingly look like a viable alternative to previously-oblivious investors who are actively seeking financial security. And the yellow metal will look even more attractive if the BRICS are truly serious about launching a gold-convertible currency to compete with the US dollar. The question is: Are you financially prepared for it?
By the Numbers
A record 53 million Americans provide unpaid family caregiving, and it’s taking an enormous toll on their financial, physical, and mental health. Here’s a closer look at some other pertinent numbers on America’s unpaid family caregivers:
$600,000,000,000 Estimated annual cost of unpaid family caregiving in the US.
54% Percentage of parents in their 40s who care for aging parents and financially support adult children.
61% The percentage of caregivers who are women.
1 Florida’s rank among the 50 states for caregiver burnout; Arizona is ranked second.
23% The share of caregivers who say their own health has declined.
85% The percentage of caregivers who report they’re under mental distress.
$7424 Amount unpaid caregivers spent annually for out-of-pocket costs.
15% The estimated decrease in woman’s lifetime earnings due to caregiving.
Source: Seniorly
Last Week’s Poll Result
What is your credit score?
- 800 or higher (82%)
- 740 to 799 (8%)
- 670 to 739 (5%)
- I’m not sure (3%)
- Less than 670 (2%)
More than 1900 Len Penzo dot Com readers answered last week’s poll question and I guess I shouldn’t be surprised that more than 9 in 10 say they have an excellent credit score. Just as positively, just 1 in 50 have a poor score.
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="483"]
Useless News: The Nail
One morning, on his way out to check the cows, a rancher said to his daughter, “The insemination man is coming over to impregnate one of our cows, so I drove a nail into the 2×4 just above where the cow’s stall is in the barn. Please show him where the cow is when he gets here.”
And with that, the rancher departed.
After a while, the artificial insemination man arrived and knocked on the front door. “I came to inseminate the cow,” he said.
So the daughter took him to the barn, and they walked along the long row of cows until she finally spotted the nail her father told her about. “This is the one, right here,” the rancher’s daughter said.
The man, who assumed he was dealing with an airhead said, “Tell me, lady, ’cause I’m dying to know: How would YOU know that this is the right cow to be bred?”
“That’s simple!” she said with confidence, “By the nail that’s over its stall.”
Laughing rudely at her, the man then asked, “And what, pray tell, is the nail for?”
As the daughter turned to walk away, she said sweetly over her shoulder, “I guess it’s to hang your pants on.”
(h/t: RD Blakeslee)
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. Newfoundland & Labrador (2.00 pages/visit)
2. Ontario (1.96)
3. Manitoba (1.84)
4. Alberta (1.77)
5. Saskatchewan (1.67)
9. British Columbia (1.45)
10. Quebec (1.39)
11. Prince Edward Island (1.33)
12. Nunavut (1.25)
13. Yukon (1.00)
Whether you happen to enjoy what you’re reading (like those crazy canucks in Newfoundland & Labrador, eh) — or not (ahem, you hosers living on the frozen Yukon 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.)
2. Make sure you follow me on my new favorite quick-chat site, Gab! Of course, you can always follow me on Twitter. Just be careful what you say there.
3. Become a fan of Len Penzo dot Com on Facebook too!
And last, but not least …
4. Please support this website by visiting my sponsors’ ads!
Thank you so much!!!! 😊
(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
From Jim, who shared this after reading my article on facts you didn’t know about your social security number:
“Just got back from the DMV. It went well — probably because I brought my passport.”
Let me guess: You live in California.
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
Hey, Len! I’m first today. Yay! Silver had a big move this week. Up 8%! What do you think of silver’s chances to hit $30 before the end of the year?
Hi, Madison! I’m cautiously optimistic for silver getting to $30 before the year is out.
Hi Len,
This new BRICS currency looks like the real deal. Wondering if the old lady’s (Yellen’s) trip to China this week was related to that? Signs of fear maybe?
Anyway, we’ll just have to wait and see I guess!
Have a great weekend everybody!
Sara
Hi, Sara. I don’t think it is a coincidence that Yellen was dispatched to China shortly after the announcement that a new gold-backed BRICS currency was going to be unveiled next month. That doesn’t mean the new BRICS currency – assuming it really does get off the ground – is going to necessarily upend the current fiat system in the near term.
At least people who took out student loans (many of whom used the money to go on vacations, drugs and booze) are getting their loans forgiven again by my favorite president of all time. Thanks, Joe.
A lot of people never went to college. Others paid their own way. Where’s their handouts?
Once again, it’s the financially responsible people who get the shaft.
You forgot the suckers who paid off their student loans. They’re getting bent over too. In case you didn’t know, this is the same group who are giving people with low credit scores better mortgage rates while making those with good or excellent credit pay extra. It’s all upside down.
The government’s involvement in student loans is the main reason why a university education became so expensive. Once those deep pockets entered the arena, the colleges knew they could raise tuitions as high as they wanted to without any repercussions. Once again, government took a perfectly affordable system and ruined it for everybody by inserting themselves into the system.
Lat week, some crazy psycho decided to purposely light a forest fire about 2km from my home. While I live on a river, have a fire pump and 300 feet of fire hose, (Mr. Prep, here), my wife and I decided to get our important things together for a just in case situation. I would drive my 43 year old Westie, (the VW prep mobile full of camping stuff), she would drive our new truck and then we could stay at one of many of people’s homes that offered us a landing spot, in town, 75 km away. We gathered up a file folder of important papers, passports, a few treasured photos, and the emergency envelop of $1500 in twenties we keep on hand for any/all emergency events; a subduction zone earthquake is the main concern on the BC west coast. However, we stayed put and watched the air tankers do their magic for 2 long days and gave thanks for the Govt that provided them with our tax dollars and their planning. Neither vehicle was started up, nor was anything loaded up. We were just ‘ready’, and took comfort that we were also fully insured and our money was safely in digital form at the regional Credit Union.
I have two neighbours, one couple in their 90’s who we would take with us and drive them to their friends in town, and one moody jerk who we just stay away from and have no interaction with us as he is becoming unstable. He is also a PM bug with hidden stores of physical silver and gold. The four of us could be away and safe within minutes, and we watched with interest as the crankmeister backed his old beater SUV up to his front door and loaded it up with box after box, and presumably his gold and silver which I would be surprised if it was less than $100K, certainly $50K. Plus, he has no friends or local connections to link up with. I presume he would have tried and find a motel or reception area to stay in.
What situation would you rather be in? Have an envelop full of ‘readies’, some dreaded digital you can access and a place to land, or have an SUV of physical PM which I presume you would have to guard night and day wherever you might land night after night?
I believe this emergency situation is analogous to the entire economic discussion we often indulge in. Sure, this was a rapid and escalating scenario as opposed to slo-mo currency debasement, nevertheless, I believe I learned several important truths.
1) Have a deliberate plan….maybe any plan….something flexible.
2) Have community relationships, (our phone lit up with offers of safety, and friends really wanted to help).
3) Be ready to walk away from everything, it is only stuff.
4) Have some cash, and obviously a credit card, any medications stocked up and with your clothes (go bag).
5) Always keep your vehicle fueled up (we always do)
6) Be insured, know your broker and how to reach out if required.
7) Be able to access bank held funds and your savings accounts, term deposits, etc.
When it is all over and nothing was required, think about your plan and how you could improve upon it. What would you do differently for something rapid like we went through, or for something slowly unfolding.
regards
Correction: I lost a couple of weeks…the fire was actually pushing 3 weeks ago when I thought of it. My dog had reconstructive knee surgery since then and I have been wrapped up in dealing with that.
And it was arson. There have been five fires lit here this summer, one burning ‘underground’ now for the last 6 weeks, and three others put out by loggers. All we know it was someone on a quad, and since Covid we are inundated with quad riders ruining our local rec spots so it will be hard to find the culprit. The RCMP are investigating so we can only hope. While not as hot here as other places, we have not had any rain for 6-8 weeks are in extreme fire hazard. We are all hoping the Govt bans all off pavement travel until we get some rain.
Thanks Len, we’ll written and to the point. Saved me the trouble of writing something that would probably turn nasty. Having precious metals allows us to still be generous within our community and church. With all the financial insecurity that abounds and the imminent collapse of the US dollar, having precious metals allows us to live without anxiety and not go into ‘hoarding’ mode with money. I am so glad we followed your advice on got our ‘wealth insurance’ early.
It’s like when we paid off our house – in financial terms it may not make the most sense. But the sense of security and peace of mind you receive from it is immeasurable.
Paul S; Tell your government to spend more of their non-gold backed dollars to work harder at putting out your fires. We live in northern Michigan and we are tired of smelling your stinking smoke every morning.
Thanks, Rick. I totally agree about the peace-of-mind precious metals provides.
I have to chime in earlier than normal to address another passive-aggressive comment from you directed at gold and silver holders, Paul.
I get it; you prefer a large and powerful government and believe its primary role is to act as a nanny to the citizenry. As such, it’s not surprising that you not only despise gold and silver – which is a direct threat to powerful centralized government control – but have also once again used your neighbor as a proxy to paint precious metals holders as selfish miserly loners who are only interested in themselves. Frankly, it’s getting tiresome.
So I’ll ask you yet again (because you never provide an answer): Why do you believe owning precious metals and being a community-oriented individual are mutually exclusive?
For what it’s worth, I too live in a fire zone. Although I live in Southern California, my backyard literally sits on the border of a 15,000 acre state park that is in turn bordered by a 750 sq. mile national forest.
In the 26 years I have lived in this neighborhood, my home has been threatened by two major fires that burned to the very edge of my community; I’ve had to evacuate twice.
Despite being an owner of physical precious metals, like you, I know how to prepare for these events. I have a plan that I execute when the time comes. And yet at the same time I am very active in a crisis to ensure my neighbors are all safe too.
I appreciate you taking the time to leave comments here; I generally enjoy your observations.
All I ask is that you stop trying to paint all precious metals holders as selfish miserly pricks. It’s an ignorant POV.
I wonder if you paint other groups of people with such broad brush strokes? Something tells me you don’t.
Oh, and by the way … there are more than a few privately-owned companies that provide fire-fighting aircraft services. I’ll bet the BC government even utilizes some of them. (In fact, I know they do.) And you can bet they operate much cheaper and more efficiently than taxpayer-provided government-operated firefighting aircraft because, unlike the government, private-sector companies actually have to make money in order to stay in business.
Any thoughts about what I’ve said here? Or are you going to remain silent again?
Oh sorry Len, I did not mean to sound passive aggressive or come off like an a total a..hole. Profound apologies. Apology for today and any past offense as none was intended.
The fire fighting companies here are all privately owned..all of them and I have friends who still fly these aircraft for their jobs, including rotary.. However, the Provincial Govt pays the total price on a per hour basis, renewed on a yearly contract. If they are squeezed, the companies will pull out and go elsewhere. Companies have a minimum charge for just being there, available and on standby, and then when they pass the contracted minimums their hourly rate kicks in which is pretty much the icing on their profit cake. If there are no fires, then companies and pilots, engineers, etc, still make their contracted daily minimums which is substantial and a very good yearly salary. But if they have a busy year, they clean up as so they should. This is a common practice. However, the cost and payment for all of the above is borne by the taxpayer. I have no idea why you thought I meant otherwise. It is a competitive industry and many Canadian companies have foreign subsids set up in other countries and Canada is a major leader in this industry; in development, procurement, and research. A particular shout out to Coulson Industries of Port Alberni, and Conair of Abbotsford for developing new aircraft types and excellence in safe fire fighting. A Canadian working on fires in the US has to have a US license, etc etc. It is a hard job to qualify for. In fact, an old friend of mine crewed a Martin Mars based at Lake Elsinore many moons ago, but those aircraft have since been replaced by turbine and now jet AC.
As an aside, I used to fly cargo into fire base camps including crews and all their supplies, and also fly evacuated people out from their threatened homes to temporary safety. This would be in the eighties. However, my pay, which was very good, was paid by the Yukon Govt via Yukon Forestry and then on to the company I worked for. I was actually paid base pay and mileage, (my favourite method of pay) because I worked like a fiend and the more I worked the more money I made. I fondly remember pulling into Watson Lake YT one June day, recovering from abdominal surgery and thinking I could ‘ease’ into the season over the next few weeks. I got in that night at 2:00am and wandered into work at 8:00am, where I was met by my boss who said he had a swamper to load and unload the plane for me and could I fly….right now. Now. It was even warmed up and pre-flighted. I did 9 hours in the air that day, on a fire, setting up the base camp. Most evenings, after my days work finished I gassed up and did additional 3 hour fire patrols for BC and Yukon Forestry using a wheeled 206. Today, they utilise satelites for the same work. Made a lot of dinero that summer, one much like this one. Nowadays, there are strict hourly limits and compulsory days off, but when I did it for a living I would work 100 days straight, and then go home to my winter job which was construction.
My most memorable flight during this time was a load of saddles, a sled dog team, and several people all jammed into the cabin as we climbed out over the flames. My knuckles are still white.
Now, back to the impression of passive aggression. Basically, I get up at 4:00am with coffee and read a few sites and usually turn off the computer by 6:00am after making a comment or two, and then go to work on my property. I might check back in at coffee break. If the weather is bad I might spend more time on the computer, but usually have stuff to do in my shop. When I check in on your site I seldom ever ever have a reply. No offense. I usually just give up, to be honest and never check again….. thinking I do not fit in or it is a closed shop of like minded friends or long time readers. I have felt that people did not care what I said.
And here is where there is an additional misunderstanding about Gold and PM. Please accept that I am a prep kind of guy and have made my entire working life based on doing so and being debt free. But when I diss gold I am really raising the question of “What are you going to do with it when sugar turns to shit”? Will it be traded in for fiat? Flour and beans? How does one protect it? Is it held in a vault, and when the wealth store is there, do you borrow against it? Sell it to a broker? What? How? Gold, not certificates.
From what I can see, people save it as a cushion of wealth, but I fail to see how it can work for you unless you sell it.
I have never figured that one out, but as Ferris Bueller famously said…..”everyone changes their attitude with a Finsky”.
Now, why am I here? Well, it is because of RD Blakesly who I met over on Wolfstreet. I participated on that blog for over a decade….when it was still Testosterone Pit, and it is always the same…..Fed Fed Fed, Govt is bad, taxes bad, Fed and stocks. Fed and stocks. Anyway, RD told me to go try Len’s, as it was more focused on practical economics. Maybe even kitchen economics, God forbid. Well, perhaps I don’t fit in here, either, but so be it. I just say what I think is right and did not mean offense.
Now, all good Canadians are adept at apologising. It is in our DNA. I am horrified I pissed you off and meant no offense and must beg off on this and other misunderstandings. I do not reply to past posts because I have never found a reply to comment back on. In fact, I only saw this one of yours out of idle curiosity as it is my wife’s turn to make supper tonight and I am on standby, so to speak. So please accept my apology and this is also direct at any readers who I did not reply to in the past.
No one wants to be ‘that guy’, and I fear that I now am.
I’ll do better next time. 🙂
I do have one PM question which might be something we can discuss at some future time. Perhaps in an article. Let’s say you have a decent retirement portfolio which includes PM etc. What do you do with it when you retire or when you really need it? My neighbour has gold and silver squirreled away in a floorboard safe. My son in law….his Dad just died and had 60K worth of gold hidden in his patio home. Luckily he used MAID and provided instructions of where it was before he passed. The ‘boys’ took it to a broker and cashed it in.
Anyway, we’re all different with unique points of views and we all know what opinions are like. 🙂 So take care and I would like to end by thanking you for your time and effort in providing this site for strangers to share ideas, and sometimes even offend, inadvertent as it might be. Take care. Paul S
I appreciate your response, Paul. Thank you. To be clear, your views are always welcome here, whether I agree with them or not. After all, the comment section is the most important part of any blog. However, I will always challenge viewpoints here that are in my opinion are unwarranted, unfair or factually incorrect. You and I both know Wolf does the same thing over on his blog.
As for your questions …
I think by their very nature, many precious metals holders are “preppers” to some degree. Obviously, I am – in fact, I always recommend to my readers that before they buy a single ounce of gold or silver, they build up a minimum three-month supply of food, water, medicine and other critical items.
I have also made the case here many times that history proves that currency failures make life miserable for the unprepared – and also uncomfortable for prepared – but the world keeps turning. What won’t happen is a total breakdown of society and a Mad Max world.
Even the worst currency crises resolve themselves within a year or so. Most are corrected far sooner than that. In between, society comes up with alternate ways to conduct business – usually barter.
Of course, barter is constrained by what economists call “the coincidence of wants” – which makes it very inefficient. This is where precious metals comes in; silver for small everyday purchases like food, fuel and wages – and gold for larger transactions. So-called junk silver (in the US, silver dollars, half-dollars, quarters, and dimes minted prior to 1965) is perfect for this. For example, the value of a silver dime will always have the purchasing power to buy a loaf of bread; likewise a silver quarter will always buy a gallon of gasoline.
I assure you, farmers and other businesses will recognize and begin adopting this almost immediately. Humans are extremely adaptable this way. The inconvenience that comes with bartering’s “coincidence of wants” is why money was invented in the first place! And gold and silver are money.
As for what precious metals holders do with the gold and/or silver in their portfolio, the answer is simple for those who understand that precious metals are wealth insurance.
Unlike fiat currency, gold and silver are long-term stores of purchasing power. As such they are to be treated as money of last resort, only to be used in the event of: 1) a currency collapse (i.e., when fiat is no longer accepted), or 2) during normal times, if all other fiat cash and paper wealth in one’s portfolio has been exhausted.
And if you die before needing it, you pass your precious metal on to your children – which is why it’s important to teach our kids: 1) the difference between fiat currency and real money, and 2) why financially-responsible people protect their nest eggs with a small proportion of physical gold and/or silver. About 10% should keep a person whole in a currency collapse; anything more than that makes gold & silver more of a speculative investment, rather than wealth insurance.
That being said, I’m sorry to hear that your son-in-law just burned his wealth insurance policy up. Let’s hope he doesn’t need it in the future.
More inflation news. Better hope you don’t need a new AC, refrigerator or AC coolant refill for either of them anytime soon. EPA decided to ban the latest AC coolant in 2028 and that has caused prices to double. They say they will be go even higher as it gets closer to deadline. All in the name of “climate change”.
https://www.zerohedge.com/energy/biden-admin-targets-air-conditioning-refrigerants-over-climate-concerns
Looks like my AC failed at the right time; when my AC gave up the ghost in 2018, I paid $7000 for a brand new HVAC system (that’s AC and heating). I read that a new AC alone now costs about $13,000 – and that is going up.
The EPA is another agency that really needs an overhaul; it has become a bureaucratic nightmare that has become far too powerful and is really overstepping its bounds. If you don’t believe me, next time you’re in DC, take a look at the palace that houses the agency.
Thanks for the round up, Len. One of my reliable weekend go to’s.
Thanks, Wilson!
Thanks Len. Diversify and preparation. PM can be converted to fiat of choice or fiat of dictate. PM can be used as direct currency to those who understand it. So can other items of value. Praying for rain to those who need it and protection from flooding for others. Glad I have the opportunity to participate in this weekly. Cheers.
Amen. Thanks for stopping by and taking the time to comment, CO2!