Black Coffee: They Know That We Know

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 …

We know they’re lying. They know they’re lying. They also know that we know they’re lying – and yet they still lie. In our country, the lie has become not just moral category, but the pillar industry.

– Aleksandr Solzhenitsyn

Credits and Debits

Debit: Did you see this? According to Warren Buffett’s Berkshire Hathaway second-quarter earnings, the company were net sellers of close to $8 billion worth of shares. Hmmm. As Buffett is considered one of the greatest investors of all time – and typically extremely bullish on the stocks – some financial prognosticators view the move to increase his cash holdings as a dark omen for equities and the markets in general. Stay tuned … October – a month that has historically been very cruel to stock holders – is right around the corner.

Debit: In other news, I see that applications for home purchase mortgages dropped to their lowest level since April 1995, thanks to a combination of the highest mortgage rates in more than 20 years and eroding household purchasing power thanks to chronic inflation. Meh. It’s probably nothing; the housing market is strong as nails. Besides, there’s always the lottery …

Credit: Maybe those ridiculous housing prices are why the latest data from the Fed shows that American workers’ minimum salary expectations hit an all-time high of $78,645 last month. This marks a notable jump from last year’s figures, which hovered around $72,900 and $69,000 in July 2022. The year-over-year increase was most pronounced for respondents older than 45, and men wanted on average $91,048. The question is: Are those expectations due to a booming economy – as the government insists – or higher inflation?

Debit: One person who isn’t in the “booming economy” camp is, John Stenderup, vice president of sales and marketing for California-based Vektor Logistics. He noted this week that the trucking “market is so incredibly depressed right now that we’re getting winter rates in the middle of summer – (although) there are still some lanes that can demand a higher rate.” The lack of demand has resulted in prices falling up to 35% year-over-year before rebounding a bit due to Yellow Trucking going into liquidation. And it’s not just the trucking industry that’s struggling – so are people with college degrees. Well … at least some college degrees.

Debit: Then again, those in the inflation camp are pointing out that in 2021 the federal government increased food stamp spending by 27%; that’s the biggest increase ever. As a result, Supplemental Nutrition Assistance Program (SNAP) spending hit a record high of $119 billion last year – that’s a six-fold increase over 20 years. Even more remarkable, despite this so-called “booming” economy, the taxpayer bill for food stamps has climbed more than 150% in the last two years alone – from $4.5 billion per month to $11 billion. Not surprisingly, many economists cite this as a big reason for the huge spike in grocery store prices over the same period.

Debit: Meanwhile, Zillow Home Loans has launched a new program to help people who want to buy homes but are being squeezed out of the market by surging interest rates. The company is offering mortgages with just 1% down for eligible homebuyers looking to own property in Arizona, and they will also contribute an additional 2% at closing. The lender plans to expand the program to other markets. If you’d like to know how this movie ends, well … similar stories have been done before. Anybody remember NINJA home loans? That is: no income, no job, no assets. Yes; I know that’s “NINJNA.” But NINJNA ain’t sexy.

Debit: Of course, nobody should count on the Fed to get America out of the fiscal and monetary predicament in which it’s mired. In fact, in a rare bit of candor, Fed Chair Jerome Powell admitted last week that “we are navigating by the stars under cloudy skies.” Right. But that’s par for the course. Oh well, there’s always retirement. Heck, maybe Mr. Powell can even try to follow Alan Greenspan’s footsteps and find a lucrative side hustle.

Credit: According to macroeconomist Daniel Lacalle, the biggest threat to the USD is “the government, (as) it continues to generate annual deficits of $2 trillion – (with) more than $14 billion estimated by 2030 – and an increasing number of irresponsible advisers saying that it can create all the money it wants without risk.” Heh. “No risk,” eh? It’s almost as if they’ve forgotten that the interest rates that have been rising sharply for the last 18 months are completely irrelevant to the economy. Well … history tells us they’re in for a shock. And fairly soon.

Credit: If you ask macroeconomist Alasdair Macleod, one thing IS certain: “52 years after all currencies became entirely fiat, there is growing evidence that the current dollar-based fiat currency (system) – like all others before it – is coming to an end. That being so, we can expect a new (gold-based) monetary system to replace it.” Indeed. After all, in a world that can’t survive without incessant deficits, money printing and interest rates high enough to control inflation, it’s obvious that the current system is rotten. Hey … somebody pass the soap:

Credit: By the way, Macleod is certain that any new system based on cryptocurrencies or CBDCs would fail shortly after being implemented – assuming they are implemented at all. Why? Macleod says it’s because “bitcoin’s existence (is) purely speculative. Therefore, when fiat dies, we can expect the whole cryptocurrency and the CBDC phenomenon to die with it. Mark it down as a modern Mississippi venture, or South Sea Bubble, both of which owed their existence to speculative excesses financed by credit – just like bitcoin.” Imagine that.

By the Numbers

It’s easy to see why the average wedding today costs almost $30,000 when you compare the average US prices in 2022 for the 12 biggest wedding expenses:

$500 Invitations

$510 Wedding cake

$980 Transportation

$1500 Reception DJ

$1900 Wedding dress

$1900 Wedding planner

$2100 Videographer

$2400 Rehearsal dinner

$2400 Florist

$2600 Photographer

$3900 Live band

$11,200 Reception venue

Source: Money.com

The Question of the Week

[poll id="490"]

Last Week’s Poll Results

When is the last time you traveled via commuter rail?

• More than a year ago (51%)
• Never (33%)
• Within the past month (10%)
• Within the past year (6%)

More than 1800 Len Penzo dot Com readers responded to last week’s question and it turns out that almost 7 in 8 of you haven’t used commuter rail in more than a year – if ever. Believe it or not, starting in 1996 I used the commuter train to cover the 35 mile trip to my job in Orange County. That lasted for about a year until I moved to within a 20 minute drive to my employer. Taking the train had its pros and cons. The good outweighed the bad, but when the bad reared its ugly head – long delays, cancelled trains, malodorous transients and other passengers of, shall I say … dubious character – those were the times I would have much rather been stuck in traffic in my own car on the Southern California freeway.

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: Smart Ass Answers

SMART ASS ANSWER #1

It was mealtime during an airline flight, so the flight attendant asked passenger John if he would like some dinner.

John thought about it for a few seconds before finally asking, “What are my choices?”

“Yes or no,” she replied.

SMART ASS ANSWER #2

A flight attendant was stationed at the departure gate to check tickets. As a man approached, she extended her hand for the ticket. Instead, the man opened his trench coat and flashed her.

Without missing a beat, she said, “Sir, I need to see a ticket, not your stub.”

SMART ASS ANSWER #3

A woman was picking through the frozen turkeys at the grocery store but she couldn’t find one big enough for her family. She asked a stock boy, “Do these turkeys get any bigger?”

The stock boy replied, “No ma’am. They’re dead.”

SMART ASS ANSWER #4

A traffic cop pulled over a kid for speeding on a downtown city boulevard. As the policeman approached the speeder’s vehicle the kid rolled down his window.

“I’ve been waiting for you all day,” said the cop.

The kid replied, “Yeah, well … I got here as fast as I could.”

SMART ASS ANSWER #5

A truck driver was driving along the freeway and noticed a sign that read: Low Bridge Ahead. Before he knows it, the bridge is right in front of him and his truck gets wedged under it. Cars are backed up for miles.

Finally, a police vehicle pulls up. The cop gets out of his car, walks to the truck driver, puts his hands on his hips and says, “Got stuck, huh?”

The truck driver says, “No, I was delivering this bridge and I ran out of gas.”

SMART ASS ANSWER #6

A college teacher reminds her class of tomorrow’s final exam. “Now class, I won’t tolerate any excuses for you not being here tomorrow. I might consider a nuclear attack, a serious personal injury, illness or a death in your immediate family – but that’s it! No other excuses whatsoever!”

A student in the back of the room then raised his hand and asked, “What would you say if tomorrow I said I was suffering from complete and total sexual exhaustion?”

After the snickering and laughter died down, the teacher said, “Well, I guess you’d have to write the exam with your other hand.”

(h/t: Gary H.)

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 describing how to know if your spending is out of control, someone calling themselves “Len Penzo Is Amazing” – no, really – left this comment:

Thanks, Len. I had no idea how much money I was wasting! You are my hero.

Well … thank you. But I see you’ve set a very low bar for your heroes.

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