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.
Well … another busy week is behind us. So with that in mind, let’s get this party started …
There are worse things in life than death. Have you ever spent an evening with an insurance salesman?
– Woody Allen
Credits and Debits
Credit: Did you see this? In a move reminiscent of Uber’s surge pricing, Wendy’s CEO Kirk Tanner unveiled a strategy to introduce “dynamic pricing” across their chain, adjusting prices in real time. But fast-food fans online weren’t having it. After a swift backlash, the company quickly retreated, saying they have “no plans” to increase prices. Uh huh. After decades of constant price increases, forgive us if we don’t believe him. Then again, there are worse places to eat …
For those of you who haven’t been to a Wendy’s since this menu photo was taken back in 1979, the regular price of a Wendy’s Single with cheese is now $4.19. (Source: fastfoodmenuprices.com)
Debit: In other news, the labor report was released last week and the initial data – as usual – was absolutely glowing. The latest headline number was 275,000 “new jobs” were created in February, which easily exceeded even the most bullish of expectations at 200,000. The mainstream media, as usual, ran with this figure – while yet again ignoring the massive 46% downward revision of the previous month’s numbers that they gushed over when that January data was initially released. As for the quality of the jobs, that is another story altogether …
Debit: For those not counting at home, 10 of the last 12 labor reports have been revised downward. This is statistically dubious – as the number of revisions should be almost equal in both directions. Well … unless the data is being gamed, which it clearly is. I know, I know; I’m not supposed to point that out. But here’s a chart illustrating the statistical subterfuge anyway. Consider this a public service since you’ll never see this mentioned in the mainstream media.
(h/t: @MargoinWNC)
Debit: Meanwhile, others are beginning to wonder if the next liquidity crisis right around the corner. It’s possible. After all, it’s no secret that our economy and asset valuations are now extremely dependent on debt. As such, the Fed has no choice but to keep liquidity flowing. So look for the Fed to start lowering interest rates to provide liquidity – even though the inflation situation demands the opposite. The good news is, we’re told that modern monetary theory (MMT) – a.k.a. the magic money tree – is a brilliant policy that is full of utopian societal benefits. So there’s that.
Credit: Speaking of liquidity pumps, James Howard Kunstler, pointed out this week that, “MMT has become popular economic dogma, but its theory remains unsubstantiated. Since the formula relies on unlimited ‘printing’ of money … you might bet that something will go wrong with such a system – and it kind of looks like something IS about to go wrong in the system we’ve built for distributing capital. ‘Capital’ (being) real wealth; hard things like good land, ore pockets, installed machinery, railroad tracks, and so on. Not figments, wishes, bets, and hallucinations.” Although, to be fair, some people actually prefer hallucinations to realty:
Credit: Not so coincidentally, sagacious commentator Franklin Sanders extolled his own take on capital this week, reminding us that “all wealth comes from the things men take out of the ground. Everything else is simply processing the free bounty God gives us through mining or agriculture. Wealth does not begin with computers, AI, clever trading, merchandising, or factories. I’ll hazard that not one economist out of 100 understands this; I know that government politicians and bureaucrats don’t. If they did, they wouldn’t show such scorn and contempt for farmers, miners and (others) who do the hard work of producing wealth.” Amen to that. Meanwhile …
Credit: Speaking of the Fed, Mr. Sanders also observed this week that the Fed is “the original fountain of market turmoil, These people have perfected the art of speaking out of both sides of their mouths at the same time. Fed Chair Jerome Powell said that interest rate cuts are likely ‘at some point’ in 2024 but, as always, he wants ‘to see a little more data.’” Not that it matters. Why is that, you ask? Perhaps the biggest reason is this:
Debit: Let’s wrap up things up with some monetary news from Africa. Last week, the Egyptian government has devalued its currency, the Egyptian pound (EGP), by 38%. Of course, as central banks always do, the devaluation occurred overnight; so Egyptians who went to bed on Tuesday woke up on Wednesday 38% poorer because their paper wealth denominated in EGPs now purchases 38% less stuff than it did the day before. Yes, it’s highway robbery. Maybe somebody should call a cop …
Credit: Thanks to rampant inflation that was plaguing Egypt for years, the clamor for gold (and silver) there was already surging. But after the overnight currency devaluation, the demand for precious metals – especially by the financially unprepared – skyrocketed. As a result, the gold or silver held by Egyptians actually saw its purchasing power increase the next day by approximately 70%, perfectly illustrating precious metal’s role as wealth insurance – but only for those who are holding it before a monetary crisis strikes. As for those Egyptians who trusted the government and its central bank to protect the value of their currency. Well …
The Egyptian central bank devalued the Egyptian pound (EGP) 38% after closing hours on March 5th. The very next morning, prudent Egyptians who were already holding physical gold as wealth insurance woke up to discover that their metal was up 70%.
Credit: Will the USD eventually suffer the same fate as the Egyptian pound? The odds strongly suggest that some form of USD devaluation against gold is inevitable – whether it’s voluntary or involuntary. The good news is, for those who have decided to hold a little wealth insurance in the form of physical gold, the timing is irrelevant. What is certain is that when it comes to currency devaluations, it’s imperative that you have your insurance in hand before the event occurs. Otherwise it’s about as useful as buying home insurance after your house burns down.
By the Numbers
A new study of US Census data has revealed the states with the youngest homeowners, based on the mortgage status of homeowners between the ages of 15 (!) and 34. Here are the ten states with the largest percentage of homeowners under age 35:
3.61% Kentucky
3.62% Michigan
3.63% Kansas
3.72% Utah
3.79% Wyoming
3.86% Minnesota
3.87% Indiana
4.16% South Dakota
4.32% Iowa
4.90% North Dakota
Source: RealEstateWitch
Last Week’s Poll Result
How old were you when you bought your first house?
- 25-30 (43%)
- Under 25 (23%)
- 31-35 (18%)
- I’ve never owned a home (10%)
- 36-40 (4%)
- Over 40 (2%)
More than 1700 Len Penzo dot Com readers answered last week’s poll question and it turns out that slightly more than 2 in 3 of you bought your first house by the time you were 30 years old. It was the same for me; I was 25 when I bought my first home – at the very top of the market. I was then upside down for the next seven years. Not good times.
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.
The Question of the Week
[poll id="528"]
Useless News: The New Hire
A man joined a Fortune 500 company as a trainee. On his first day he dialed the company cafeteria and shouted into the phone, “Get me some hot coffee and a jelly donut — and make it quick!”
The voice from the other side responded, “You pathetic fool! You’ve dialed the wrong extension!! Do you know who you’re talking to?”
“No,” replied the trainee.
“I’m the company CEO, you fool!!!” screamed the voice from the other side.
The trainee shouted back, “Congratulations! By the way … do you know who YOU are talking to? You utterly pathetic fool!!!!”
“No,” replied the CEO.
“Good!!” said the trainee. And with that, he hung up.
(h/t: Cowpoke)
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More Useless News
Here are the top — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Quebec (2.12 pages/visit)
2. Nunavut (2.00)
3. Saskatchewan (1.93)
4. Yukon (1.77)
5. Alberta (1.71)
9. New Brunswick (1.61)
10. Ontario (1.54)
11. Manitoba (1.50)
12. British Columbia (1.46)
13. Northwest Territories (1.33)
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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
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Photo Credit: stock photo
Hi Len,
Thanks for the cuppa!
I know the public is not in favor of dynamic pricing but if inflation continues to stay high I think more companies are going to try it. Don’t shoot me, I’m just the messenger!
Have a great weekend everybody!
Sara
Hi Sara! Some places have been doing dynamic pricing for a long time. The airlines are probably the biggest example. The hotel industry does it. So does Uber, and Amazon. I’ve read that GM and Ford also do it for auto parts (although that seems like a strange one to me).
About that Wendys burger in the picture … when was the last time you ever had a fast food burger that looked like the picture in an ad?
No kidding. There’s a funny scene in the movie Falling Down where Michael Douglas point that out. I even think Len shared it here a long time ago.
Good memory! Yes, I did.
I’ll assume that’s a rhetorical question, Hymdol. 😉
My brother lives paycheck to paycheck. He has one part time job at the moment and he is struggling to find a full time position. I suggested he try getting a second job to build up some savings or at least earn a little fun money until he can find a full time job, but he told me no. He says for now he will just keep trying to eliminate all discretionary spending and eat less. Pretty sad. I don’t get that POV, but everybody is different I guess.
So true. Everybody’s brain is wired differently.
My take on Wendy’s retreat and this week’s question. In reverse order: 1. I would choose true love as it is much more valuable than $10 million. 2. Re Wendy’s pricing idea: I predict 40% of fast food and small restaurants closing in the next two years because they have had to raise prices 40-50% to survive the 30% inflation of the past four years and to survive the reduction in sales volume due to the poorest among have stopped eating out and the half who still do have seen price points that we are finally starting to choose to eat out significantly less than in 2019. You can add to that the new price levels have reached levels many of fast food fans now make healthier food choices. “Why pay through the nose for unhealthy food”
Plus here in CA minimum wage kicks in. Thus incresing prices.
Yep … on April 1st, thanks to the moronic politicians in the California State Legislature (almost all of whom have never run a business of any kind) most fast food workers in California will be making $20/hour. This means that either: 1) more robots (who work for free) will be replacing their human fast food colleagues; 2) most fast food joints will shut their doors; 3) a Big Mac will soon be $10 – without the fries and soft drink.
If the government were put in charge of the Sahara Desert, it would run out of sand within a decade.
Agree, Kev!