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 …
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences.
– Proverbs 22:3
The economy of imaginary wealth is being inevitably replaced by the economy of real and hard assets.
– Vladimir Putin
Credits and Debits
Debit: Did you see this? A new dating trend has been popping up, where men send money requests to women asking for their share of first-date expenses after they decline a second date. If that ain’t bad enough, some men are even daring to ask women for reimbursement of the entire first-date bill since the men didn’t get a return on their “investment.” No, really. Then again, when it comes to date night fails, I guess it could be a lot worse …
Debit: Meanwhile, in case you haven’t noticed, oil prices have been rising steadily over the past month. That’s bad news for those hoping to see inflation tamped into submission. It’s really hard to believe the US was actually energy-independent just three short years ago. At some point you’d think somebody would realize that you can print all the funny money you want – but what you can’t print is oil (and its valuable energy byproducts).
Debit: In other news, the latest marketing data shows that while teens who are earning up to $20 per hour working entry-level low-skill jobs still appear to be buying pricey Abercrombie & Fitch clothes, their parents are moving down, opting to buy clothes at Marshall’s instead of Macy’s, and shopping for pasta, rice and homemade soup that can be stretched over multiple meals as opposed to single-serve cans of soup, in a bid to save some cash. As for ice cream, well … apparently there’s a flavor for that. Assuming you can still afford it:
Debit: In light of all this news, it shouldn’t be surprising that 61% of all Americans are now living paycheck to paycheck. That includes 44% of people earning $100,000 or more annually. At the same time, just 12% of Americans have more than $5000 in their emergency fund. That’s because the majority of the remaining 88% find themselves on a malodorous pile of personal debt. Not unlike another smelly mountain from long ago — albeit one that actually benefitted society:
Credit: With so many Americans living paycheck to paycheck and an emergency fund of less than $5000, the truth is, if your nest egg currently has just an ounce or two of physical gold in it, you can be sure you’re far better off than most households. Especially when the next round of banking system tremors finally hit the US financial system. (GET LINK)
Credit: Needless to say, there will be no relief for households unless inflation can be subdued. Unfortunately, macro analyst Matthew Piepenburg points out that, the more the Fed hikes rates, “the fatter and more expensive Uncle Sam’s deficits become; this leads to the ironic scenario in which the war on inflation – fought with rising rates – actually causes even more inflation because rising rates make America’s debt costs skyrocket to the point where they can only be paid by a Fed mouse-clicker” creating money out of thin air. In other words: the debt will soon be taking on a life of its own. And, yes …. we’ve all seen this movie before:
Debit: Of course, rising bond yield means their value is plummeting. And although there are still four months to go before the new year, the 10-year Treasury bond is on track for a third year of losses in 2023, something that hasn’t happened in roughly 250 years of US history. More precisely: it has never happened. In the meantime, yields keep rising, dragging interest rates and debt servicing costs up with them …
(h/t: @PaulHook_Em)
Credit: After the new BRICS members’ are formally introduced, the emerging economic bloc will include six of the world’s top 10 oil producers, 50% of the world’s natural gas reserves, and 37% of global GDP adjusted for purchasing power parity (PPP). Compare that to the G20’s share of global GDP, which currently sits at just 30%. Furthermore, with the addition of Argentina and Saudi Arabia, the BRICS will also have six permanent G20 nations among its own membership bloc. Add it all up and there can be only one conclusion …
Credit: As macro analyst Bill Holter notes, “The BRICS nations represent a huge percentage of global population, production and thus trade. They correctly deemed that doing business with the US has not been a good deal for many years as they would ship real goods and be paid in an ‘unreal’ currency, the dollar; (so) something for nothing.” Oh, and on a related note …
Debit: Speaking of the BRICS, China’s housing market is melting down. In fact, 34 (!) of the nation’s top 50 private-sector real estate developers are already in default. This brings us back to Mr. Holter, who reminds us that “everything stops once credit stops – and credit is based on confidence. How confident are you that the numbers on your bank, brokerage, and insurance statements are real? How confident are you in anything today?” I know those are rhetorical questions, but I’ll answer anyway: Not very. Even so, I sleep soundly because I insure my wealth with physical precious metals. The bigger question is: How do you sleep?
By the Numbers
The shift to the digital economy and the rise of online banking has made it easier and more convenient for many Americans to do their banking. However, believe it or not, many Americans don’t have the necessary infrastructure to access online banking reliably. A closer look at the numbers tells the story:
10% Households that don’t have a smartphone.
20% Households without a desktop or laptop computer.
16% People who don’t have a cellular data plan.
25% Households without broadband Internet.
10% Homes with no Internet subscription at all.
11% Households without a high school degree that do not own a computer.
1% Households with a Bachelor’s degree or higher that don’t own a computer.
26% Households earning less than $20,000 in annual income that don’t have an Internet subscription.
4% Households earning more than $75,000 in annual income that don’t have an Internet subscription.
Source: UpgradedPoints.com
The Question of the Week
[poll id=”491″]
Last Week’s Poll Result
What’s a reasonable amount of money to spend on a wedding reception?
- Save your money and skip the reception! (49%)
- Less than $15,000 (39%)
- $15,000 to $30,000 (7%)
- More than $30,000 (5%)
More than 1800 Len Penzo dot Com readers responded to last week’s question and it turns out that roughly 1 in 8 of you feel it’s reasonable to spend at least $15,000 on a wedding reception, while only 1 in 20 say spending at least $30,000 is reasonable – which is interesting considering that the average cost of a wedding and reception today is $30,000. As for yours truly, I think the smartest move would be to take the money you’re willing to spend on a reception and give it to bride and groom. That’s a nice chunk of change to start a new life off with – assuming they spend it wisely.
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: For Better Or Worse
A young lady noticed that an old couple eating at the local Burger King were splitting a small hamburger and small fries. They carefully split the burger and fries down the middle.
Assuming the old couple couldn’t afford two meals, the young lady went over to the table and offered to buy them each their own meal.
“That’s very kind of you to offer,” said the old man, “but we share absolutely everything with each other. Thank you just the same.”
So the lady sat back down at her seat. She then noticed that the old man was waiting patiently while the old woman ate her half of the meal. Upon seeing that, she got back up again and asked the old couple if they were sure she couldn’t buy them another meal.
“No thank you,” said the old man. “We really do share absolutely everything.”
“Then why aren’t you eating together?” she asked.
The old man said, “Because I’m waiting for the teeth.”
(h/t: Just the Facts)
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. Alaska (2.25 pages/visit)
2. New Hampshire (2.24)
3. Arizona (2.22)
4. Wisconsin (2.13)
5. Oklahoma (2.11)
46. Oregon (1.42)
47. Washington (1.37)
48. Virginia (1.36)
49. Iowa (1.35)
50. Minnesota (1.24)
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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 explaining why Miracle Whip doesn’t belong on a tuna sandwich, John F. Hutchison left this comment:
You’re right! Miracle Whip doesn’t belong on a tuna sandwich; so hold the tuna.
You know, John … after that comment I should really regale you with an awful fish pun, but I think I’ll leave it to salmon else.
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.
Hi Len,
Economic crunch is a good name for ice cream. I’m surprised Ben and Jerry’s didn’t think of that one for real! I will say I’ve never been a big fan of their ice cream. Store brands taste just as good. They come in bigger containers too!
Have a great weekend everybody!
Sara
Hi, Sara! My favorite ice cream flavor is banana, so I love their Chunky Monkey. If it didn’t have the walnuts in it, it would be even better!
Count me as one of those people who don’t have a smart phone. There are more of us out here than you think.
And then there are people like me who have a smart phone, but pretty much never use it.
Dwarf given crayons at a restaurant. Too funny! Wouldn’t be surprised if a lawyer turned that into a lawsuit and made him a fortune.
I likes that one too! I bet that wasn’t the first time that happened.
Credit card debt tells the story. There was a very big rise in credit card debt just before the 2008 financial crash.
Yes, there was, Hub. Once the credit dries up, the real fun begins.
Hey, Len! Silver keeps getting beat up! What’s going on? 🙁
Give it time … but remember, Madison: If you own silver for insurance purposes, the price action should be irrelevant to you!
The late Richard Russell famously predicted the Fed would need to “inflate or die” but what he really meant was “hyperinflate or die.” When the inevitable bank failures that follow in the wake of Silicon Valley Bank start cascading, this will become more apparent to everyone.
We shall see, Kurt. Let’s hope they come to their sense and move to a new monetary system before this one gives up the ghost for good.
hey Len, Who is ‘they” in this……everyone in all countries? These days people, (and especially politicians) cannot agree on much of anything at all. It scares me, to be honest; this up is down, and our current world of no facts and very little civility. I think individuals need to be prepared for almost anything and of course this will vary mightily to everyone’s situation.
And it is interesting how several big insurance companies are now bailing out from covering natural disasters. We had a fire close to us this summer and new mortgages were not being approved in our area until it was extinguished. Maybe people will have to insure their homes in Co Ops? Regardless of the Govt debt levels, I’m pretty sure people will still demand Govt steps up and help them out after every event.
“They” depends on two parties: 1) the US, as current owner of the premier global reserve currency; and 2) the rest of the world (ROW).
Either can come up with a new system on their own, of course. If it is viable and fair to all involved, then it will eventually become the de facto global monetary system for international trade. If it is not fair to everyone, then it will flounder and continue to screw the citizens of the world at the expense of government. (See nations like Argentina or Venezuela which introduce new fiat currencies like clockwork that never solve the underlying problem – too much government spending).
Great job. Thanks for the round-up, Len.
Thanks, Timmah!
Dear Len, The site isn’t working. Every article I try to read presents the “click here to read entire article” button and that flops article back to the beginning when I click on the button! Frustrating. Can’t read any of them and don’t think it is my computer.
Try clicking on the green header at the top of the page, Karen. That should clear the problem.
“strong opinions about power tool manufacturers.”
My opinion is that power tools help you make mistakes much, much faster. With hand tools, I can watch my mistakes unfold before my eyes while I am making them.
LOL! Great point, Tom.
The constant tripe of how poor Americans are is really getting old. These numbers are meaningless without context. Are we collectively richer or poorer than x years ago? That would be informative. Yes, there are a lot of poor, but also a heck of a lot of middle class to rich folk (likely most of the readers of this blog included). Tens of thousands of million dollar homes in our major cities. Giant RV by the thousands. Who are buying the thousands of $60k Tesla’s and luxury cars? Marinas full of boats. Individuals own a majority of Investment and vacation homes, for which there are tens of thousands if not millions. So yes a lot of poor, but also a lot of folks doing pretty darned well……
I’m sorry if you think this is “tripe,” Frank. Everything is relative. Yes, the poorest Americans are still far better off than people on the lower economic rungs of most other nations. But the US GDP is now almost entirely a reflection of currency printing (monetary and price inflation) – not real economic output.
We know real wages have declined for 26 or 27 consecutive months, so in that regard, middle- and lower-income Americans have been getting poorer over that timeframe.
Also, you can’t judge a book by its cover. I know lots of people with a boat, large home and two luxury cars and/or a giant RV in their garage who are up to their eyeballs in debt. In other words: they are one lost job from losing everything.
The bottom line is a lot (probably a majority) of the wealth you see today is based on debt – including a significant number of those middle class to rich folks you see. That wealth you see is, for the most part, an illusion; this will become more apparent to everyone in the fullness of time.