Black Coffee: Where There’s Smoke …

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?

For gold is tried in the fire, and acceptable men in the furnace of adversity.

– George Santayana

Credits and Debits

Debit: Did you see this? The final home sales figures for 2023 are in and they were the lowest since 1995. In fact, barely 4 million housing units were sold last year – a result of higher interest rates, diminishing personal incomes due to the effects of inflation, and affordability of homes. And first-time buyers are still struggling; they made up just 29% of December sales. Historically they make up 40% of the market. Even realtors know that is not the sign of a healthy market. And speaking of dubious signs:

Debit: We’re sure that most of those first-time homebuyers who continue to be shut out of the market wouldn’t be surprised to discover that a new survey found that just 20% of the general public say their financial situation is improving. However, Americans who have a postgraduate degree and an annual income of more than $150,000, 74% say their finances are getting better. In fact, one of those financially fortunate survey takers was recently caught on tape:

Debit: First-time homebuyers aren’t the only ones who are feeling the pinch. According to the always-optimistic bureaucrats who crunch numbers at the Congressional Budget Office (CBO), the US will add another $20 trillion to the National Debt through 2033. In reality, the number will be far larger. Not that anyone should be surprised …

Debit: Coincidentally, since 2021 Social Security has been running a deficit and dips into its trust fund to make ends meet. In fact, the program loses so much money now that its trust fund is shrinking rapidly, and Social Security projects it will fully be depleted by 2033. Uh oh. And speaking of “uh oh” moments …

Credit: Of course, as macro analyst Simon Black points out, “One of the many, many reasons (the trust fund deficit) is so important is because Social Security will no longer be a buyer of US government bonds; it will be a seller. And that’s a big deal because for the past 90 years, Social Security always invested its annual surplus into government bonds, which essentially gave politicians an extra pile of cash each year to spend. So who is going to buy all this new debt?” Short answer: The Fed, with currency conjured out of thin air. Oh … and every American, via reduced purchasing power from the debauched US dollar (USD).

Debit: By the way, Mr. Black also points out that, “During the pandemic the Fed magically created about $4 trillion in new money – then used that money to buy US government bonds. Of course, that $4 trillion in new money also helped create the highest inflation in four decades. So, if buying $4 trillion of government bonds led to 9% inflation, what’s going to happen when the Fed has to create more than $20 trillion to buy government bonds?” Well … one thing is certain: You can bet that, despite being tied to the CPI, any future Social Security cost of living adjustments will continue to be far less than the actual living costs.

Credit: Coincidentally, macro commentator Franklin Sanders revealed that he “got to cogitatin’ about the astounding $34 trillion US national debt; it is up 426% since 2003 when the debt was $6.5 trillion. This is exponential growth, increasing at an increasing rate – also known as a train wreck – because in real life it cannot be sustained. Merely paying interest on the debt already takes more than 37% of total tax receipts. What happens when those interest payments take 50% of receipts? The USD and the present system of the Fed monetizing debt simply cannot survive.” Very true, Mr. Sanders; very true. But until then …

Credit: In the meantime, macro analyst Bill Holter has his own take on the US debt debacle: “We have already crossed the ‘debt service’ rubicon. How does interest get paid – not to mention the principal – without printing the funds to do so? Can you say banana republic with no possible way out?” That, too, is a good question. And here’s another one …

Debit: Unfortunately for the Fed – not to mention the American public in general – they can no longer have its financial cake and eat it too. That’s because the time is rapidly approaching where the Fed will be asked to choose between holding rates down to keep the economy from crashing, or tempering inflation with higher rates. That being said, every spendthrift government using a fiat monetary system ultimately needs inflation to avoid “going broke. ” So that’s the path they choose – even though it leads to sharply lower living standard via monetary debasement for the citizenry. Apparently, the same politicians made this choice too:

Credit: Believe it or not, according to John Hathaway, Senior Portfolio Manager at Sprott Asset Management, “gold has soundly outpaced the S&P 500 over the past 25 years, excluding income, and more than kept pace with income included.” But unlike the major stock market indices, Hathaway notes that “the gold price is not in nosebleed territory (due to) the long-term devaluation of the USD against physical assets.” (Psst. Just don’t tell that to those who still worship at the altar of the “Almighty Dollar” …)

By the Numbers

Here are the US states with the cheapest – and most expensive – electricity prices in the nation, based on the latest Energy Information Administration (EIA) data on electricity retail prices (cents/kWH).

50 Hawaii (cents per kWH: 39.7)

49 California (22.3)

48 Massachusetts (21.3)

47 Connecticut (21.1)

46 New Hampshire (21.0)

5 Nebraska (8.9)

4 Utah (8.8)

3 Idaho (8.5)

2 North Dakota (8.4)

1 Wyoming (8.2)

Source: Plumbing Navigator

The Question of the Week

[poll id="521"]

Last Week’s Poll Results

How long have you been residing at your primary address?

• More than 20 years (33%)
• 11 to 20 years (25%)
• 6 to 10 years (24%)
• 1 to 5 years (14%)
• Less than 1 year (3%)

More than 1900 Len Penzo dot Com readers responded to last week’s question and it turns out that nearly 3 in 5 of you have been living in your current residence for at least 11 years. Somewhat coincidentally, the average person lives at 11 different addresses during their lifetime. I’ve lived at six. How about you?

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: English Class

A linguistics professor was giving a lecture to his students one day. “In English,” he said, “a double negative forms a positive. In some languages though, such as Russian, a double negative is still a negative.”

“However,” the professor continued, “there isn’t any language in the world wherein a double positive can form a negative. Not a single one.”

Just then a voice from the back of the classroom piped up, “Yeah; right.”

(h/t: Salamander)

Buy Me a Coffee? Thank You So Much!

For the best reading experience, I present all of my fresh Black Coffee posts without ads. If you enjoyed this week’s column, buy me a coffee! (Dunkin’ Donuts; not Starbucks.) Thank you so much!

.

More Useless News

Here are the top five articles viewed by my 48,002 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

1. Contrarian Shopping: 20 Things I’m Willing to Pay More For
2. Sneaky Tricks Retailers Use to Make You Buy Stuff
3. Need a Wedding Singer? Here are Booking Rates for 120 Famous Bands
4. A Real Life Example of the High Cost of Convenience
5. 4 Super Apps That Can Help You Earn Extra Money

Hey, while you’re here, please don’t forget to:

1. Subscribe to my weekly Len Penzo dot Com Newsletter! (It’s easy! See the big green box in the sidebar at the top of the page.)

2. Make sure you follow me on my new favorite quick-chat site, Gab! Of course, you can always follow me on Twitter. Just be careful what you say there.

3. Become a fan of Len Penzo dot Com on Facebook too!

And last, but not least …

4. Please support this website by patronizing my sponsors!

Thank you!!!! 😊

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

If I’m to believe everything I get in my email inbox, The FBI has apparently been keeping tabs on me — and they don’t like what they see:

Sir: We have logged your IP address on more than 40 illegal websites. We need you to answer the questions in this attachment.

I don’t think so. In fact, why don’t you just cut out the middleman and go directly to the NSA?

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