Black Coffee: Suspicious Minds

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 a wonderful week. And with that, let’s get right to this week’s commentary, shall we?

The hardest thing to explain is the glaringly evident which everybody has decided not to see.

– Ayn Rand

Credits and Debits

Debit: Did you see this? The post office expected to turn a profit this year – but they lost $6.5 billion instead. This is especially surprising considering the additional revenue the USPS picked up as a result of the UPS drivers strike earlier this year. The biggest hit to the USPS’s bottom line was a $920 million decrease in revenue from marketing mail. It turns out that businesses reduced the amount of junk mail they sent out this year due to sharply rising costs of ink and paper. Then again, the post office isn’t the only one with problems …

Debit: Of course, compared with every other government program the USPS is practically a model for efficiency – which means the great majority of America’s National Debt has been wasted. Frankly, it’s hard to believe that, just three short years ago, the US was grappling with “only” $23 trillion in national debt. Now, that figure will soon surpass $34 trillion. Not that anyone in Congress is listening. Or the mainstream media for that matter …

Credit: You’d think that for $34 trillion, we would get federal bureaucrats who could accurately calculate inflation. As macro analyst Chris Martenson points out, according to the government’s latest CPI figures, food inflation is running at “only” 3.2% year-over-year – which would mean the typical $200 grocery bill last year is barely $6 higher today at $206.40. Heh. Does that sound even remotely close to your personal experience? It certainly doesn’t jive with ours; conservatively, our grocery bill is at least 20% higher than last year. And not just because we buy a lot of pricey Parmigiano Reggiano cheese either …

Debit: In other news, I see that wealthy Los Angeles homeowners are having a tough time selling their abodes, thanks partly to a new Golden State ‘mansion tax’ that affects residential properties over $5 million. In fact, luxury homes are lingering on the market for double the time of the average Southern California property. As a result, desperate owners are trying to rent their mansions – at least until they find a sucker buyer who will take them off their hands. Remember, housing-market strife is typically felt at the top-end first. Then again, thanks to the falling value of the US dollar, being a millionaire ain’t as impressive as it used to be.

Debit: Meanwhile, for us middle- and lower-class peons, the ability of US households to cover an unexpected $2000 expense is at the lowest level in a decade. And in the latest sign of an economy edging deeper into troubled waters, more Americans than ever are raiding their 401(k) retirement accounts to cover basic living costs. In fact, roughly 1 in 20 people took either a hardship withdrawal or a loan from their 401k account in the third quarter. The top two reasons given for the third-quarter hardship withdrawals? Avoiding foreclosure or eviction, and medical expenses. Imagine that.

Debit: Meanwhile, individuals under 50 have added more than $2 trillion to their debt load last quarter, while people 50 and older added about half that figure. Collectively, US household debt exceeds $17.3 trillion. For those not counting at home, adults in their 40s have the highest piles of debt, while those in their 30s and 50s have similar debt loads. That being said, almost all American adults find themselves in a similar predicament, regardless of age:

Debit: Then again, Americans aren’t the only ones in debt; as noted earlier, the federal government is dependent on its creditors too. Unfortunately, those creditors are pulling in their lines of credit, as foreign ownership of marketable US Treasuries continues to fall. Last month, foreigners sold a net $17 billion of US notes and bonds. So why are US creditors suddenly showing an increased reluctance to buy more US debt? Well … nobody can be 100% certain. But I definitely have my suspicions – and I’m not alone either:

Credit: In other news, macro analyst Alasdair Macleod said this week that “the era of interest rate suppression is over.” He also warned that, “the G7 central banks are all technically bankrupt – a situation which can only be addressed by issuing yet more unproductive credit. These are the (same) institutions tasked with ensuring the integrity of the entire dollar-based global credit system, which is staring into the black hole of its own extinction.” Uh huh. You know … at this point, I don’t think even Superman can save the current system. Although maybe this guy can …

Credit: By the way, financial commentator John Rubino is telling a similar story. This week he warned that, “We’re in the blowoff stage of a 70-year credit super-cycle; a financial death spiral. The debt goes up, the interest on the debt goes up and that raises the debt even further. The official US debt is growing by $1.7 trillion a year, and $1 trillion of that is interest costs – and those interest costs are rising as the overall debt goes up. We’re a society that has completely lost control.” I can’t argue with that. Although some parts of society seem to be managing better than others …

Credit: Believe it or not, the officials actually running the current global debt-based monetary system actually know that time is running out. So it shouldn’t be surprising to learn that the Dutch National Bank (DNB) recently reaffirmed that if when there’s another financial crisis the gold price will skyrocket, and national gold reserves can be used to underpin a new gold standard; this strongly suggests that central banks are preparing for the implementation of a new gold-based monetary system. In fact, the DNB also revealed that Eurozone central banks have been gradually balancing their gold reserves in preparation for this eventuality.

Credit: So, with all that in mind, this week’s message is a simple one: If holding a little physical gold as a hedge against the failing global fiat monetary system is good enough for the world’s central banks, then shouldn’t it be good enough for you too?

By the Numbers

Talk of a tame CPI report this month is entirely a mirage that’s easier to see with year-over-year comparisons. Food is a particular case in point – especially when considering “official” price increases for various CPI categories versus two years ago:

8.4% Meat, fish and eggs

10.6% Fruits and vegetables

14.4% Food away from home

14.8% Food at home

15.1% Dairy

20.7% Cereals

Source: MishTalk

The Question of the Week

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Last Week’s Poll Results

If you could only eat two kinds of pie this Thanksgiving, what would they be?

• Apple (25%)
• Pumpkin (23%)
• Pecan (15%)
• Chocolate Cream (9%)
• Key Lime (8%)
• Cherry (5%)
• Sweet Potato (4%)
• Blueberry (4%)
• Banana Cream (3%)
• Lemon Meringue (2%)
• Something else (2%)

More than 1900 Len Penzo dot Com readers responded to last week’s question and it turns out that if you asked one of them to bring the pies for Thanksgiving, you’d probably be getting apple and pumpkin – unless you asked me … then you’d be getting apple and chocolate cream!

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.

Useless News: Just Asking

Everyone seems to be in such a hurry to scream “prejudice” these days.

A customer asked, “In what aisle can I find the Polish sausage?”

The clerk replies, “Are you Polish?”

The guy, clearly offended, says, “Yes; I am. But let me ask you something. If I had asked for Italian sausage, would you ask me if I was Italian? Or if I had asked for German Bratwurst, would you ask if I was German? Or if I asked for a kosher hot dog, would you ask if I was Jewish? Or if I asked for a taco, would you ask if I was Mexican? Or if I asked for some whiskey, would you ask if I was Irish?”

The clerk says, “No; I probably wouldn’t.”

The guy says “Well then, because I asked for Polish sausage, why did you ask me if I’m Polish?”

The clerk replied, “Because you’re in Home Depot.”

(h/t: RD Blakeslee)

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More Useless News

Here are the top five articles viewed by my 47,586 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

1. How Much Gold & Silver Should People Own?
2. Why Thanksgiving Never Falls on November 29th or 30th
3. The High Cost of Being Poor
4. 7 Great Careers That Require No Experience to Start
5. 4 Big Drawbacks to Store Credit Cards

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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 me at: Len@LenPenzo.com

After reading a recent guest post on the high cost of being poor, Pierrette Brousseau left this comment:

Great post — candid and refreshing! Anybody who thinks owning a business and being poor is ‘glamorous’ is a space cadet.

I agree — frankly, they should Apollo-gize for even thinking that way.

If you enjoyed this, please forward it to your friends and family. 😊

I’m Len Penzo and I approved this message.

Photo Credit: public domain