Black Coffee: Not Your Father’s Dollar

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 …

Rich men’s sons are seldom rich men’s fathers.

– Herbert Kaufman

Credits and Debits

Debit: Did you see this? As the Epoch Times reports, “California has the highest income tax rate in the country (top tier of 14.4%). It has the highest statewide sales tax rate (7.25%, plus local sales taxes). It has the highest gas tax rate ($0.78 per gallon). Yet, it ranks third to last in the country in terms of road quality.” Tell us about it; we live here. And with all the potholes, it makes us wonder where all the tax revenue is going. On second thought … we do know where it’s going; it’s being wasted on more unproductive government jobs, useless government programs and political cronies.

Debit: Speaking of the Golden State, nearly 10,000 California fast food workers have been fired thanks to the state’s new $20 minimum wage. “Restaurants are struggling to stay above water, and (politicians) threw them an anvil,” California Assembly minority leader James Gallagher . “We warned (them) this would cost jobs. They ignored us, and here we are with the highest unemployment rate in the country poised to get even worse.” Then again, this is what happens when clueless politicians and public sector bureaucrats who have never run a business of their own try to tell private sector companies how to do their job. This is disconcerting in more ways than one …

Credit: In other news … Thanks to inflation, $100 bills are the new $20s. With that in mind, the Treasury Department discontinued the issuance of $500 in 1969 due to lack of use – this was at a time when those $500 bills were worth multiple times what they are now. However, with prices continuing to soar, one Arizona Congressman has introduced a new bill that orders the Fed to reintroduce $500 bills into circulation. In the meantime …

Debit: I’m sure those $500 bills will come in handy for those who have to pay rent. On the other hand, nearly one in five renters fell behind on their rent in the past year, while rents have soared 20% since the pandemic. In fact, rent payments are up $400 for the average renter since 2021. Hmm. I’m sure this has absolutely nothing to do with renters falling behind on their payments either …

Debit: Meanwhile, the latest job figures are out and once you get past the smoke and mirrors and dig into the details, the ugly truth is that during the last 12 months, the “growing” US economy has gained 1.5 million part-time jobs – but lost 1.2 million full-time jobs. But you’ll never see that in the mainstream media. Instead, it’s all rainbows and unicorns – which means the subterfuge is intentional. Although there is a slight chance that the media is simply guilty of this:

Debit: So … just how ugly is the economy? Well … nearly 2600 store closings were announced during the first four months of 2024 alone. That includes some of America’s biggest names including Macy’s, Walmart, Walgreens, Foot Locker and 7-Eleven, which have all announced that they already have, or will be boarding up some doors this year. If that isn’t alarming enough, even popular discount stores like Family Dollar and 99 Cents Only have been forced to close shops because price inflation has made them unprofitable.

Credit: Declining trust in fiat currencies – and the US dollar (USD), in particular – has reduced the USD’s share of total reserves to 48%. At the same time, gold’s share is increasing. In fact, steady central bank purchases of the yellow metal since 2009 has increased the precious metal’s share of global international reserves to the detriment of fiat currencies. And now gold has surpassed the euro, with the next fiat currency to be challenged being the USD. Unfortunately, nobody seems to be paying attention – especially this guy …

Debit: Not coincidentally, US banks are sitting on $517 billion in unrealized losses due to deteriorating Treasury bond portfolios. How did we get here? Well … it all started with the birth of the petrodollar in 1972, which can be seen in the chart below. Keep in mind that the National Debt didn’t exceed $1 trillion until 1981 – and since then that number has doubled roughly every eight years. The debt is now $35 trillion – so it’s no wonder that gold’s share of global reserves has been increasing since 2015, as it’s becoming increasingly clear that the USD’s role as a reliable store of value is over. So the struggle continues – not only for the banks and the USD, but for dear old Dad too …

Credit: Of course, many people seem to believe that the declining value of the USD means America is doomed. But that’s not true at all. Yes, it will result in a continuing decline of US living standards. However, as macro analyst Matthew Piepenburg observed this week, “America is slipping, but not ending. The USD is being repriced, not replaced.” He goes on to say the greenback will remain a key global currency, “but it’s no longer the premier savings asset or (longer-term) store of value.” Yep. That role is in the process of being returned to honest money – better known as physical gold – as anyone who has been paying attention already knows.

Credit: We’ll wrap up with some additional words of wisdom from Mr. Piepenburg, who deftly explains why the USD’s exorbitant privilege has been foolishly squandered and, as a result, will soon be ceding its monetary system supremacy to the yellow metal. He notes that “the world wants a reserve asset that can’t be frozen or stolen and that simultaneously retains – rather than loses – its (purchasing power).” Indeed it does. And, quite frankly, you should too. At least you should if you’re planning on enjoying a retirement that’s free from financial stress.

Last Week’s Poll Result

How is your investment portfolio doing this year?

• It’s above water (69%)
• It’s treading water (19%)
• It’s underwater (12%)

More than 2000 Len Penzo dot Com readers answered last week’s poll question and it turns out that more than 2 in 3 of you are enjoying portfolio gains so far this year. Hooray! As for yours truly, I’m having a particularly good year so far myself – and that’s despite my mining stock holdings, which continue to be the most unloved sector in the entire stock market. Oh well … they can’t all be winners.

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="540"]

By the Numbers

The Council of Economic Advisers estimates that certain types of junk fees cost US households $90 billion per year. With that in mind, a recent survey revealed the ten places where Americans said they’re most likely to see junk fees. Can you guess which place topped the list?

26% Sporting events

27% Dine-in restaurants

28% Vacation rentals

32% Airfare

33% Internet service

40% Phone plans

43% Hotels

50% Concert tickets

57% Food delivery

59% Online shopping

Source: USA Today

Useless News: Dinner Date

A man and a woman were having a quiet, romantic dinner in a fine restaurant. They were gazing lovingly at each other and holding hands. The waitress, taking another order at a table a few steps away, suddenly noticed the woman slowly sliding down her chair, under the table and under the table cloth but the man stared straight ahead.

The waitress watched as the woman disappeared out of sight.

The waitress, worried that it might offend other diners, went over to the table and, tactfully, began by saying to the man: “Pardon me, but I think your wife just slid under the table”.

The man calmly looked up at her and said:  “No, she didn’t. She just walked in.”

(h/t: RD Blakeslee)

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!

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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. Prince Edward Island (2.14 pages/visit)
2. Quebec (2.10)
3. Alberta (2.03)
4. New Brunswick (1.90)
5. Manitoba (1.75)

9. Yukon (1.57)
10. Newfoundland & Labrador (1.56)
11. British Columbia (1.49)
12. Ontario (1.42)
13. Saskatchewan (1.33)

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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 me at: Len@LenPenzo.com

Sometimes I get the strangest email questions, like this one from Mr. Wonderful:

You got change for a hundy?

You actually have a $100 bill in your wallet? Hmm … If you’re so wonderful, then why aren’t you married?

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: stock photo