Black Coffee: The Gaslighters

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 …

Beware the narcissists’ lies that cast shadows on reality.

– Tracy Malone

Credits and Debits

Debit: Did you see this? According to a new study by Realtor.com, higher mortgage rates and sky-high housing prices has made it cheaper to rent than to own a home in all of America’s largest metropolitan areas. The study – which covers the 50 largest US metropolitan areas – found that while it was already cheaper to rent than buy in 90% of those metros last year, it’s now pushed to 100% – the first time this has happened since Realtor.com began tracking renting vs buying three years ago. Then again, this isn’t a problem in California, where most fast food workers just got a mandatory raise to $20 per hour. Oh, wait …

 

Credit: In other news, macro analyst Matthew Piepenburg opined this week that even though Fed Chair Jerome Powell, government bureaucrats, and politicians keep reminding us we’re at ‘full employment’ and nominal GDP is growing at 6%, the reality is that “nominal GDP that is ‘growing’ on the back of over $23 trillion in US Treasuries issuance is simply debt-driven growth. However, debt-driven growth is not growth – it’s just debt.” Now if only somebody would tell that to the stock market …

Credit: So while the US government data continues to pretend there’s a booming economy, Zero Hedge noted this week that, “The official narrative is breaking bad. ‘Soft’ survey data is literally collapsing as ‘hard’ data improves gradually. Even so, there are plenty of people who continue to believe the government statistics – and other fantastical tales …

Debit: Indeed, a CNN poll found that 48% of Americans say they believe the economy remains depressed, while only 35% said that things in the country today are going well. The question is: Who are you going to believe? We suspect for many people the answer depends on whether or not their student loan debt is going to be forgiven …

Credit: According to economist Daniel Lacalle, “The accumulated $6.3 trillion deficit of the past four years had a negative impact on the economy. Rising taxes and persistent inflation are eroding the average American quality of life. More citizens need to hold more than one job to make ends meet, and the number of multiple jobholders has reached a multi-decade record. Gross domestic income (GDI)  proves the economy is stagnant, and if we look at GDP and GDI excluding the accumulation of debt, they show the worst year since the 1930s.” I’m pretty sure there’s a word for that …

Credit: Meanwhile, a recent Forbes article highlights a fundamental flaw in how inflation is traditionally reported. The 12-month inflation snapshot reported by the government obscures the cumulative impact of inflation; that number is currently “just” 4%. However, even if you believe the intentionally-tempered CPI, the cumulative inflation rate since 2020 gives us a more-revealing figure of 20%. But that’s never reported. Why? Because, as Forbes points out, the cumulative 20% inflation rate means what cost $100 in January 2020 now demands $120, effectively reducing your purchasing power to just 83 cents on the dollar. Then again …

Credit: By the way, John Tobey from Forbes also observes that “the 20% four-year change is drastic. It may seem a happy occurrence for stock investors … but (for) the people whose income, savings and assets don’t rise enough, if at all, there is distress and despair. They’re the ones who must cut spending or run into financial troubles; and late loan payments are on the rise, including mortgages. What that means is key: The Fed’s self-congratulation on getting inflation down is false praise. They’ve created lasting damage for those that can least afford it.” Yes. But despite this, there are still calls for the Fed to abandon their 2% inflation mandate. No, really.

Debit: The good news is credit agency Standard & Poors has reaffirmed the United States’ AA+ credit rating, citing its financial situation as “stable.” (Insert laugh track here.) Unfortunately, the current fraudulent debt-based currency system requires an ever-increasing supply of US dollars (USDs) to keep the global economic engine from seizing. The bad news is, so much lubricant has been injected into the economy since 2009 that the entire system is about to blow a gasket. Which is why these guys would never get hired as a central banker:

Debit: Meanwhile, citing America’s ‘unprecedented’ debt trajectory, the director of the Congressional Budget Office is warning everyone that the US could suffer a market crisis similar to the one seen in the United Kingdom (UK) during the fall of 2022. That crisis briefly sent UK yields soaring, sparked a run on the British pound, led to various UK pension fund bailouts, and forced the Bank of England to immediately restart quantitative easing (QE). Uh huh. Thanks for that, Captain Obvious.

Credit: Sagacious financial commentator Franklin Sanders: “Day by day silver and gold keep proving they have entered a period of historical reevaluation upward. I saw today that Philadelphia Fed researchers say that a switch to a gold standard could stabilize prices. What?? Friends, those are words that even five, no, three, years ago I could never have imagined any Fed mouthpiece uttering. Things are moving faster and faster.” Yep … and it appears that the Fed is finally getting brave enough to admit how this is eventually going to play out:

Credit: On a related note, central banks and sovereign wealth funds are continuing to accumulate (gold) bullion. According to macro analyst Alasdair Macleod, “This leads us to question why this safe-haven trade appears to be accelerating, when the consensus is that inflation is yesterday’s problem. It would appear that this view isn’t being shared by the deep financial establishment; (so) it can only have concluded that there’s a looming currency crisis, encouraging them to sell USDs and buy gold, regardless of price.” Agreed. Ironically, this is the very same establishment that discourages the public from holding the yellow metal at every opportunity.

Debit: Bottom line: There is now $1 trillion being added to the US National Debt every 100 days. Soon the federal government will be adding $1 trillion of red ink every 50 days. Not long after that it will be every 25 days. We believe only then will the American public finally wake up and realize the nation’s debt problem has become fatal – and that will seal the fate of the current debt-based fiat monetary system. Sadly, at that point it’ll be far too late to protect the purchasing power of their long-term savings. Thankfully, there’s still time – but the cost of wealth insurance is rising sharply now. Eventually, it will become unaffordable.

By the Numbers

A new survey on Americans and their spending habits has been released. Here are the key findings:

96% … confessed to impulse buying

88% … say they feel stressed about money

74% … say they have an overspending problem

55% … admit to spending recklessly

46% … have missed paying a bill at some point because of nonessential spending

33% … admit that they’ve made a purchase they knew they couldn’t afford in the past year

29% … report “doom spending,” or spending excessively to cope with stress

28% … confess to keeping a financial secret from their partner

16% … say their spending has ruined their lives

14% … have opened a secret bank account or credit card

Source: Clever

The Question of the Week

[poll id="531"]

Last Week’s Poll Results

How many bathrooms does your current home have?

More than 2000 Len Penzo dot Com readers responded to last week’s question and it turns out that 5 in 9 of you live in a home with two bathrooms; that compares to 62% of all US homes, based on 2022 US Census data.

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: Quick Thinker

After a night of toasts and heavy drinking during a wild party at a local bar, Jerry was clearly in no shape to drive, so he sensibly left his van in the parking lot and walked home. Unfortunately, as he was stumbling along the street, Jerry caught the attention of a local policeman, who promptly pulled up alongside the very drunk man.

“What are you doing out here at three o’clock in the morning?” asked the cop.

“I’m on my way to um … uh … a lecture,” Jerry slurred.

“Oh, really?” inquired the constable sarcastically. “And who in their right mind is going to give a lecture at this ridiculous hour?”

“My wife,” said Jerry.

(h/t: Cowpoke)

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More Useless News

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(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 a recent Len Penzo dot Com post that shared some clever ways to eliminate your financial problems without more money, Frank had this to say:

I think some people have financial problems because they spend too much.

Frank, I this most people have financial problems because they spend too much.

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