Black Coffee: Drivin’ and Cryin’

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 …

You’ve got to be very careful if you don’t know where you are going, because you might not get there.

– Yogi Berra

Credits and Debits

Debit: Did you see this? On average across the nation, apartments today are renting for less than they did one year ago. This marks a major deceleration from recent years, when annual rent growth neared 18% nationally and soared to over 40% in a handful of popular cities. Hooray! Now for the bad news: While the annual rate of change did indeed turn negative last month, rents are on the rise again – and have been rising since January. Imagine that.

Debit: So inflation is clearly still a problem, despite the government CPI data. Those lower CPI prints are why seniors can expect a paltry 3% Social Security (SS) cost-of-living adjustment (COLA) next year – that’s well below the 8.7% increase in benefits received this year. The latest 2024 estimate translates to an average monthly benefit check hike of less than $54. This year’s SS check payout – which was the biggest increase in four decades – raised the average retiree benefit by more than $140 per month. Meanwhile, younger people are more concerned about this:

Debit: In other news, too many people remain unaware that when you deposit cash in a bank you’re no longer the legal owner of this money – in fact, you become a creditor to the bank. Now consider this: Thanks to the Dodd-Frank Act, bail-ins have replaced bailouts for banks that get into financial trouble. Those bail-ins are used to cancel some – or all – of the distressed bank’s debt by reducing the value of its shares, bonds, and uninsured deposits. More specifically: your deposits. So the banks’ risk has been transferred to you. Yes; they’re all a bunch of thieves. It’s just that they’re not quite as obvious as these guys …

Credit: Speaking of monetary risk, billionaire businessman Frank Giustra observed that these days, “our money has a lot less purchasing power, is a lot less trustworthy, and its functions are a lot less clear . By all measures, it seems money’s only remaining function is as a medium of exchange.” Well … that. And keeping the stock market moving in an upward direction – as long as the central bank printers are running in overdrive. Then again, everything is relative, isn’t it?

Credit: In a legitimate monetary system, a shrinking money supply would quickly put the economy on a more stable long-term path by allowing any economic bubbles that sprouted up to pop. And as economist Ryan McMaken points out, “it also lays the groundwork for a real economy built by saving and investment rather than spending made possible by artificially low interest rates and easy money.” The trouble is: we don’t have a legitimate monetary system – it’s rotten to the core. If only somebody would write a song about it. Oh wait … they did:

Credit: Of course, our fraudulent debt-based monetary system would implode if the money supply were allowed to contract unabated, which is why macro analyst Egon Von Greyerz is warning that “the US is approaching a grossly paradoxical point which boils down to this: When a nation with $33 trillion in debt raises rates to ‘fight’ inflation, debt servicing costs become so egregious that the only way to ‘pay’ for it is via Fed (printing). At some point – and don’t ask me when, but it’s looming – the Fed will pivot from disinflationary QT to mega-inflationary QE. All to be conveniently blamed on COVID, Putin and/or the climate.” Uh huh. Oh, and speaking of the Fed …

Credit: For his part, macro analyst Bill Holter states VonGreyerz’ observation far more succinctly. He says, “We’re broke. You can’t have a third of all federal taxes paid out in interest. And that number is only going to grow over time.” Holter goes on to note that, “If the markets don’t collapse ahead of time – although they certainly will – we’d get to the point where the interest would eat up all the tax receipts.”

Credit: And before you dismiss Holter’s warnings of a collapsing monetary system because his tin foil hat is on too tight, he goes on to point out this undeniable fact: “That’s not my opinion; it’s a mathematical equation. The debt can’t be paid back; it’s not possible. We’ll default one way or another. (The Fed) will either print the crap out of the dollar and devalue it, or the US will outright (default).” In the meantime, the bureaucrats in DC will continue massaging economic data to keep the naysayers cocky and everyone else at ease.

Credit: Needless to say, the rest of the world’s nations are fully-aware that the USD is in trouble. According to macroeconomist Alasdair Macleod, “The strategic wisdom of President Nixon and Henry Kissinger to tie the dollar’s future to energy demand has been undone in a stroke. The entire Gulf Cooperation Council, led by the Saudis, has now abandoned the 1973 agreement. The link is gone, and with it the dollar’s future security.” But is it really?

Debit: By the way, Macleod also points out that “this attack on the dollar marks the end of the fiat currency era, (but) it hasn’t been picked up by Western media, and investors in America seem oblivious to the danger.” It’s sad but true. That being said, if you’re reading this and eventually get caught with your financial pants down, you really have no excuses.

By the Numbers

Last year, Americans increased their credit card debt by a record $179 billion. The grand total owed by credit-card holders now is more than $1.1 trillion. But Americans aren’t all in the same boat when it comes to credit-card debt. Here are the states with the lowest – and highest – median credit card debt:

50 Iowa (median credit card debt: $2077)

49 West Virginia ($2131)

48 Wisconsin ($2144)

47 Kentucky ($2230)

46 Mississippi ($2304)

5 Maryland ($2966)

4 Texas ($2979)

3 Connecticut ($3106)

2 Colorado ($3290)

1 Alaska ($3517)

Source: WalletHub

Last Week’s Poll Result

Do you think college offers the best opportunity for financial success?

• No (59%)
• Yes (30%)
• I’m not sure (12%)

More than 1900 Len Penzo dot Com readers answered last week’s poll question and it turns out that 3 in 10 of you still believe a university education offers the best opportunity for financial success. Maybe so – but not before it puts you in a deep financial hole. Frankly, unless you are getting a STEM degree, I think college is a terrible career investment and a waste of valuable time that could be better spent building your own business or learning a vocation or other skill with on-the-job training. But, hey … that’s just me.

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="488"]

Useless News: Bottoms Up!

The CEO of Budweiser orders a Bud Light.

The CEO of Miller orders a Miller Light.

The CEO of Coors orders a Coors Light.

The CEO of Guinness orders a Coke.

The first three ask the CEO of Guinness why he didn’t order a Guinness, to which he replied:

“I figured if the three of you weren’t ordering beer, it would be rude for me to order one.”

(h/t: Cowpoke)

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. Alberta (2.11 pages/visit)
2. Ontario (2.05)
3. Manitoba (1.96)
4. Quebec (1.72)
5. Saskatchewan (1.70)

9. British Columbia (1.41)
10. Newfoundland & Labrador (1.39)
11. Saskatchewan (1.36)
12. Yukon (1.33)
13. Nunavut (1.00)

Whether you happen to enjoy what you’re reading (like those crazy canucks in Alberta, eh) — or not (ahem, you hosers living on the frozen Nunavut tundra) — please don’t forget to:

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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 on how to find a reputable low cost pest control company, Gerri in Bangladesh — no, really — shared this:

Me and my boyfriend moved into our new apartment and we wanted to make sure that there were no pests in it. Unfortunately, we found out it has fleas infested with bubonic plague.

Call me a cynic, but something tells me you don’t really live in Bangladesh. Los Angeles, maybe; but Bangladesh … nope.

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