Black Coffee: Looters & Moochers

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 …

Gold is money; everything else is credit.

– JP Morgan

You say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles; wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is made – before it can be looted or mooched – made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can’t consume more than he has produced.

– Ayn Rand, Atlas Shrugged

Credits and Debits

Credit: Did you see this? A new study by USA Today has discovered 67% of those with more than $10,000 in debt are expecting an inheritance to wipe it away. The average expected inheritance was $320,000. However, 84% of survey respondents said they expect to inherit between $100,000 or $200,000, while 15% expect at least $500,000 and 6% expect upward of $1 million. Hmm. I wonder how many of these people are unaware that their parents are spending their inheritance right now.

Debit: Speaking of debt, national credit card balances have soared to a record $1.08 trillion. Now for the punchline: Only half of American credit card users believe they can fully pay off their December balances, as per the LendingTree Credit Card Confidence Index. For those of you counting at home, the index hit an all-time low of 51% in December. Okay … show of hands: Who thinks that number will be plumbing new depths before the end of 2024?

Debit: Credit card balances aren’t the only thing that’s soaring. For example, a McDonald’s in Connecticut is charging $19 for a Quarter Pounder combo. No, really. I know this because a viral social media post recently showcased the exorbitant prices there – including $18 for a Big Mac meal and $17 for two cheeseburgers – and that has many folks wondering if fast food joints are pricing themselves out of business. After all, while nobody confuses fast food with gourmet dining, the price point used to be palatable. Not anymore. Hey … do you think that leaves an opening for taco salads and Bud Light to make a comeback?

Debit: By the way, while our spendthrift federal government keeps telling us that inflation in the US is only 3% – in an effort to hide their blatant theft of Americans’ purchasing power – back here in the real world, fuel, food and housing bills reveal that the price increases are far higher. To prove it, just take one look at Chick-fil-A: The popular fast food chain has hiked its prices a whopping 21% over the last two years. And if you think that’s crazy, then there are these …

Debit: Of course, the government doesn’t just game the inflation numbers – they rig the jobs data too. However the manipulation of the workforce figures over the last year has been particularly egregious. To wit, last week the BLS revised its previously-published figures for November and October sharply downward. For those counting at home, that means ten of the past 11 jobs reports have been revised substantially lower – – in fact, 25% of all 2023 announced monthly job gains were revised away in later months. Imagine that.

Credit: Indeed, as financial analyst Michael Lebowitz points out, with “the fiscal stimulus that drove above-average economic growth in the post-pandemic era exiting the system and monetary policy remaining very tight, economists and investors are wondering what comes next – and the scenario rapidly gaining in popularity is the Goldilocks narrative.” Granted, the economy is still “growing” on a technical basis – but take out government borrowing and spending and it’s actually in a depression. And if you think that is merely another doom & gloom prediction, you really need to think bigger …

Debit: Do … what is the real inflation rate? Keep in mind the US government’s measuring stick – the consumer price index (CPI) – has been changed, not once, but twice since 1980. With that in mind, measuring inflation by their original 1980 basket of goods shows that inflation is pushing 13%. That means that even with an annual 5% increase in wages – consumer purchasing power is declining by 8% per year. Yes; the difference between reported inflation and what we see in the real world is extreme. Although I wouldn’t say it’s quite as extreme as this — at least not yet:

Debit: Meanwhile, we notice that the use of the Fed’s emergency bank term funding program (BTFP) – a temporary bank bailout facility created during last year’s banking crisis, and set to expire this March – surged by more than $5 billion last week to a new record high of $141 billion. Nope, nothing to see here, folks. Or here …

Debit: Then again, as long as the Fed’s BTFP program continues to exist, the banks don’t need your capital to stay solvent – which is why those same banks continue to shamelessly pay their depositors a measly 0.1% on their FDIC insured savings. Yes; it’s all one big scam. Okay, okay … make that two big scams:

Debit: Think about it: Thanks to the BTFP, banks can park their underwater Treasuries at the Fed and receive par value for them. What a deal! Never mind that it is debt monetization by any other name. Of course, we can’t do that – just as we could never return an underwater mortgage to the bank and be fully reimbursed for it. So … without the BTFP, where would interest rates – and, by extension, the true value of the Treasuries – be right now? More importantly, what would bank balance sheets look like? (Hint: They wouldn’t be pretty.) Oh … and don’t get us started on the ever-increasing cost to service the National Debt:

Credit: With all this fraudulent debt monetization going on under the guise of “temporary Fed banking facilities,” is there really any wonder why foreign central banks have lost their appetite for US Treasuries, if they’re not already dumping them outright? After all, why would any bank – or any cogent individual for that matter – want to store their hard-earned wealth in something that’s being devalued at the alarming rate that we’re currently experiencing? The good news is, there’s a rock-solid time-tested remedy that’s still available for entities and individuals who worry about such financial matters. At least for now …

Credit: Here’s the rub: Gold and silver prices are currently suppressed by a manipulated paper market. But if each fool holding paper gold or silver in a precious metals ETF could exchange their paper claims for the physical metal backing them in those ETF vaults, the yellow metal would hit $10,000 in a New York minute. And silver would easily sell for triple digits. Why? Because those ETF vaults don’t hold enough physical gold or silver to cover the paper claims for them – and that’s fraud by any other name. Eventually, the law of supply & demand will reassert itself. And that’s when the world will learn that rock beats paper. At least in economics.

By the Numbers

In order to understand which university graduates have the highest earning potential, the US Bureau of Labor Statistics analyzed salary data through September 2023 and calculated the median salary per field of degree. Here are the ten degrees with the highest median starting salaries:

$69,000 Biology

$70,000 Architecture

$72,000 Science technologies

$74,000 Physics

$77,000 Construction

$78,000 Mathematics

$80,000 Engineering Technologies

$82,000 Transportation

$90,000 Computer & Information Technology

$97,000 Engineering

Source: QRFY

The Question of the Week

[poll id=”519″]

Last Week’s Poll Result

Do you consider yourself a buy-and-hold stock investor?

• Yes (91%)
• No (9%)

More than 1800 Len Penzo dot Com readers answered last week’s question and it turns out that only 1 out of 11 respondents say they’re a stock market day trader – or close to it. Not surprising, I guess. Especially when stocks have been in a general upward trajectory for at least a decade now. If the markets ever see a sustained bear market, that will probably change.

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: Alternative Medicine

An old cowhand came riding into town on a particularly cold, dry, windy day. The local sheriff watched from his chair in front of the saloon as the cowboy wearily dismounted and tied his horse to the rail. The cowboy then moved slowly to the back of his horse, lifted its tail, and placed a big kiss where the sun don’t shine. He then dropped the horse’s tail, stepped up on the walk and aimed toward the swinging doors of the saloon.

“Hold on there, Mister,” said the sheriff. “Did I just see what I think I saw?”

“I reckon you did, Sheriff; I got me some powerful chapped lips.”

“And that cures them?” the Sheriff asked.

“Nope,” said the cowhand, “But it keeps me from lickin’ ’em!”

(h/t: Sam I Am)

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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 explaining the reasons why you should — and should not — pay off your mortgage early, Nicky wrote this:

Nice post! I learned something new today.

They’re a rare find ’round here, Nicky… but even a blind squirrel finds an acorn once in awhile.

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.