Black Coffee: Labor Pains

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 …

It is only through labor and painful effort, by grim energy and resolute courage, that we move on to better things.

– Theodore Roosevelt

Credits and Debits

Debit: Did you see this? Five months after unionized UPS workers ratified a massive five-year labor deal that included massive pay bumps that gave many drivers six-figure salaries – and total compensation for senior drivers upwards of $170,000 annually – the logistics company announced this week that 12,000 management jobs are going to be eliminated. The reason: Sliding package demand and soaring union labor costs. Huh. Nobody could see that coming. As if management didn’t already have enough problems …

Credit: Speaking of cutbacks, Ford is cutting production of the F-150 Lightning electric pickup after weaker-than-expected electric vehicle sales growth. More to the point, dealers are reporting slower sales and rising inventories on the electric truck, which starts at just under $50,000. And if you think that’s expensive, consider this:

Debit: Maybe truck owners caught wind of the latest MotorTrend test that found the Ford Lightning’s towing range to be “dismal.” How dismal is the EV truck? Well … MotorTrend’s testing revealed that “an F-150 Lightning Platinum saddled with a camper that nearly maxed out its 8500-pound towing capacity couldn’t even cover 100 miles.” Heh. So … who was it again that thought transitioning from cars that run on petrol to EVs was a good idea? Oh, that’s right … the folks who continually worry about this:

Debit: On a related note, according to the Wall Street Journal, “For many Americans, getting insurance for both their cars and homes has gone from a routine, generally manageable expense to a do-or-die ordeal that can strain household budgets.” To illustrate their point, Allstate increased auto insurance rates an average of 17%,15% and 30% in New Jersey, New York and California, respectively, while regulators in California are still mulling Allstate’s request for a 40% increase in Golden State home-insurance rates. With that in mind, it’s not surprising that car owners are thinking of clever ways to keep their rates as affordable as possible …

Debit: According to the Bureau of Economic Analysis, US GDP grew in the fourth quarter 3.3%, which obliterated the consensus estimate of 2.0%. It also came in well above the highest Wall Street forecast. Now for the punchline: To generate $1 in growth, the budget deficit had to be increased by $1.55. Even more astounding, it takes more than $2.50 in new debt to generate $1 of GDP growth. For any slow kids that may be hiding in the back, this means every penny of additional debt acts as an additional drag on the economy – not a tailwind. I know what you’re thinking: So, Len, what is Congress going to do about this? Well, folks … here’s your answer:

Debit: Of course, during the last several years GDP, even after being massaged to the upside, was still below the artificially-low rate of inflation as measured by the government’s misleading CPI. In other words: After taking into account the actual inflation rate, the US economy has contracted sharply. But I know – the inflation rate has been falling for more than a year now. Never mind that it’s still rising.

Debit: So, depending on which number you choose to use, new tax revenue generated is barely breakeven with the interest expense. Go ask the CFO at your company if they will borrow money just to cover the cost of the interest… that is a return-on-investment (ROI) of 0%. That’s why the only answer is to keep interest rates near the zero bound. It isn’t a good answer, it is the only answer. Any other answer leads to utter disaster. Just look at Japan — 0% interest rates and slowly decaying standards of living. Then again, those who did their homework already know that. And on a related note …

Debit: It’s no coincidence that America’s transition from a manufacturing-based economy to a financial began soon after the USD’s anchor to gold was broken in 1971. In fact, in 1975 the 20 biggest US companies included consumer goods retailers, oil producers, drug companies, automotive and heavy-equipment manufacturers, and even a manufacturer of bathroom fixtures – and only one financial company, Citicorp at #17, was on the list. Today, there are three financial companies and four more whose business model is based on little more than selling consumer information. See for yourself:

Credit: As financial commentator Franklin Sanders observes, “Notice that for all the Wall Street claims and stocks’ performance in recent years, if you had done nothing more complicated 24 years ago than put your money into gold coins it would be worth 612% more (7.1 times). Silver would be worth 337% more (4.4 times).” Unpossible, you say? Well … the scoreboard doesn’t lie. (Although it appears that most financial advisors still aren’t aware of this.)

Debit: Indeed, the beauty of gold is that it is nobody’s liability. That’s because gold is money – unlike today’s fiat currencies, including the UD dollar (USD), which are born out of debt; fiat currencies are IOUs conjured from private citizens, public corporations and the federal government promises to repay a debt at a later time. In essence, it’s a confidence game. And, unfortunately, it’s going to keep going until the public finally has the courage to say “no.” Behold … Exhibit A:

Credit: The great economist Murray Rothbard concluded that, “On the free market … the monetary unit – the unit of a nation’s accounts – naturally emerges as a unit of weight of the money commodity; for example, the silver ounce or the gold gram.” Despite the USD’s anchor to gold being broken in 1971, another renowned student of monetary history, macro analyst Jim Grant, notes that the resulting monetary system chaos will ensure that “silver and gold will be money again.” At least eventually. Those who are holding it when that time comes will be glad they did. As for those who aren’t, they’ll wish they did.

By the Numbers

Americans have hundreds of billions of dollars in personal loan debt. With that in mind, here are the states with the biggest – and smallest – increases in personal loan debt over the past year.:

50 Alaska (smallest increase in personal debt)

49 Vermont

48 Wisconsin

47 South Dakota

46 Alabama

5 Idaho

4 Maine

3 Delaware

2 Iowa

1 Montana

Source: Wallet Hub

The Question of the Week

[poll id="522"]

Last Week’s Poll Results

Does your primary home’s kitchen cooktop operate on electricity or gas?

• Electricity (53%)
• Natural Gas (47%)

More than 2000 Len Penzo dot Com readers responded to last week’s question and it turns out that just over have of you have an electric cooktop in your primary home. Frankly, I’ve never been able to control the heat very well on that type of stove. I suspect that’s a big reason why almost all restaurants cook their meals using natural gas.

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: Missing Car

A man walked out of a bar, stumbling back and forth with a key in his hand. Unfortunately for him, a cop on the beat saw this and quickly intercepted the guy.

The man was clearly intoxicated, so the cop asked, “Can I help you, sir?”

“You ssshure can, Ossifer!” said the drunk, “Sssshomebody ssshtole my car!”

“Where was your car the last time you saw it?” asked the cop.

“It wasssh at the end of thisssh key!” the drunk replied, logically, if a bit too literally.

About this time the cop noticed that the man’s member was being exhibited for all the world to see. So he asked the man, “Sir, are you aware that you’re exposing yourself?”

The bewildered drunk looked down and without missing a beat moaned, “Oh, Gawd! They got my girlfriend too!”

(h/t: Cowpoke)

Buy Me a Coffee? Thank You!

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

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 also follow me on Twitter.

3. Become a fan of Len Penzo dot Com on Facebook too!And last, but not least …

4. Please support this website by checking out my sponsors’ ads!Thank you!!!! 😊

(The Best of) 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 only suckers buy whirlpool bathtubs, Mike Smith had a message for all of the Jacuzzi defenders who left comments explaining why I was wrong:

For all the folks here who are supporting the use of these tubs, that’s great and I’m glad for you. But my wife will not sit in a tub of water with chunks of dark crud floating around her.

Have you tried dimming the lights, adding some rose petals, and burning a few candles?

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