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.
Another busy week is crossed off the list. So without further ado, let’s get right to the commentary …
Man is the only varmint that sets his own trap, baits it, then steps in it.
– John Steinbeck
Credits and Debits
Debit: Did you see this? A new survey has found that 24% of all Disney-goers have accrued debt during their trips; this includes 45% of parents with children under the age of 18. The average amount of debt for those parents was $1983, with in-park food and beverages the biggest drain on the family vacation budget. It’s hard to believe that the price to get into Disneyland when it initially opened back in 1955 was $2.50 – that’s about $24 in today’s US dollars (USD). And even as late as the mid-70s you could still get an adult Disneyland day pass for just $6. Today, a one-day pass is anywhere from $104 to $194, depending on the day you attend.
Debit: It may be a reach – okay … it absolutely is a reach, but indulge us anyway – perhaps the high cost of Disney is contributing to the rise of in-person identity theft. Apparently, fraudsters grew more sophisticated during the pandemic, and that has made it far easier to pull off such crimes these days. The trick is in making as difficult as possible for those useless jackasses (who, by the way, give all of the decent jackasses out there a bad name). Take this kind-hearted fella, for example …
Debit: By the way it’s not just high-priced Disneyland tickets that are impacting the public’s financial situation; it’s everything essential to living our everyday lives. For example, home prices in America’s 20 largest cities rose for the 14th straight month. As a result, the price of a house is 7.2% more today than it was a year ago. And while home prices appears to be stuck in a seemingly-relentless escalation mode, first-time homebuyers will continue to pine for the days when buyers had all the power …
Credit: As macro analyst Matthew Piepenburg observed this week, the US has “been getting drunk on debt at levels far beyond our national income as measured by tax receipts or GDP. In short, prior generations enjoyed the Fed martinis while the next are left with the hangover and the tab. For example, the last two US generations are making less money on an inflation-adjusted basis, while their cost of living, on everything from unaffordable housing to grotesquely rigged tuition goes higher.” In other words: the American Dream is officially dead. At least for now.
(h/t: @RealAJAntoni)
Debit: In the meantime, America’s financial situation will continue to deteriorate over the coming year as $10 trillion of federal debt will be rolled over by the end of 2024 – and that debt will be at far higher interest rates, thereby increasing the US’s already-skyrocketing debt service costs. I’m sure we don’t need to remind you that once a country’s debt service costs become its biggest expenditure, the national currency is officially on death watch. Unfortunately, as the currency goes, so goes the economy. Not that it needs any more help.
Credit: The only way to not only permanently slay price inflation, but also restore the economy such that a single blue-collar income will once again become sufficient to comfortably support a family of four, is by reanchoring the US dollar (USD) to gold. As macro analyst Alasdair Macleod points out, “Price volatility is always in dollars and not gold, which correlates much more with the commodity complex. It follows that if energy and commodity prices are rising, the most important factor is the dollar declining.” On the other hand, if you listen to the Fed, inflation is actually a good thing …
The oil price is extremely stable – but only when priced in physical gold. Or a US dollar (USD) that is anchored by the yellow metal, as it was prior to 1971.
(h/t: @BrendanEich)
Credit: As Judy Shelton, macroeconomist and author of Money Meltdown notes, “You can’t have sound money without sound finances. I also don’t know how people talk about free trade without addressing currency gyrations and how they impact trade.” Shelton suggests that a gold standard is the way out of America’s current debt predicament. Oh, and she also suggests that a gold-backed bond may be the pathway to that new monetary system. Hey … it couldn’t hurt. But until then, we’ll remain stuck playing their rigged game. Oh, and speaking of rigged games …
Debit: Of course, the trouble is, there is more than enough evidence – or should we say lack of evidence – to suggest that the 8200 tons of gold that the US claims to have in Fort Knox and other depositories is long gone. Never mind the fact that the General Accounting Office (GAO) admits that America’s stash of 0.999 fine gold – the only gold acceptable for settling international commerce – was reduced by 95% between 1957 and 1972. Maybe that’s why a legitimate audit of US gold reserves hasn’t been conducted in more than 75 years. As for where all that gold might be today, well … here is the FBI’s top suspect:
Credit: Not coincidentally, central banks added a net 1037 tons of gold to their reserves last year, just slightly below the record of 1082 tons in 2022 – and it appears that pace will continue. A new survey of 70 central banks found that 20 of them plan to buy more gold during the next 12 months – that’s the most since 2018. Only 3% said they plan to reduce gold reserves. As for the reason: Central banks say they’re concerned about “shifts in global economic power.” Or to put it another way: They know global debt is a ticking time bomb, and they’re preparing for the resulting transition from fiat currency to physical gold. Not that anyone is paying attention …
Debit: By the way, Shelton also warns that the fate of the US may be similar to what happened to the Soviet Union, which had its own debt-based monetary system and insurmountable debt. After seven decades of lies and utopian economics, there was lots of shouting and wailing when that socialist paradise scam finally collapsed without warning in 1992; yet another example that you can’t taper a Ponzi scheme. With that in mind, Shelton wonders: “Is the US still going to be here 50 years from now? (Because) I don’t see how.” Sadly, neither do we …
Debit: Unfortunately, those in charge of the current debt-based monetary system will do their best to retain control – and the power that comes with it – for as long as possible; the pain it’s inflicting notwithstanding. As macro analyst Dr. Daniel Nagase astutely pointed out this week, our society’s current monetary predicament is no different from how “a mugger with a gun has more power in the moment than an individual with millions of dollars.” Carrying out his analogy, the good news is that a bullet-proof vest in the form of physical gold is available for your financial protection. At least for now.
By the Numbers
The 2024 Social Media Shopping Survey, which measures the impact of social media on our personal finances, was recently released. Here are the key findings:
20% Percentage of Americans who describe their social media purchases as “scams.”
36% Share of those who say social media makes them feel frustrated about their finances.
40% Percentage of Americans who try to present a falsely positive financial image on social media than reality.
46% Share of those who believe social media is bad for their debt.
67% Percentage of Americans who say social media promotes overspending.
75% Share of people who admit to making an “unnecessary” purchase through social media.
Source: Wallet Hub
The Question of the Week
[poll id="542"]
Last Week’s Poll Results
What are your top three reasons for carrying cash?
- Emergencies (19%)
- Privacy (18%)
- Small purchases (17%)
- Tipping (16%)
- Cash only locations (15%)
- Cash discounts (12%)
- Financial management (4%)
More than 2100 Len Penzo dot Com readers responded to this week’s poll and it turns out that a plurality of you carry cash mainly for emergencies. At the other end of the spectrum, just 1 in 25 of you use cash as a means to manage your finances. I figured that number would be a little bit higher than it was, but perhaps that figure is a reflection of the financial maturity of the people who read my blog – if not personal finance blogs in general.
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: Tough Times
The economy is so bad:
- My neighbor got a pre-declined credit card in the mail
- A picture is now only worth 200 words
- The Treasure Island casino in Las Vegas is now managed by Somali pirates
- Wives are having sex with their husbands because they can’t afford batteries
- CEOs are now playing miniature golf
- The green-energy industry just laid off 25 Congressmen
- A stripper was killed when her audience showered her with rolls of pennies while she danced
- If the bank returns your check marked ‟Insufficient Funds,” you call and ask if they meant you or them
- McDonald’s is selling the 1/4 ouncer
- Parents in Beverly Hills fired their nannies and learned their children’s names
- A truckload of Americans was caught sneaking into Mexico
(h/t: Hubbard)
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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
A few days ago I found this invitation from Jamie sitting in my inbox:
I’m hosting a Google On Air Hangout to discuss buying a car! The event will take place on Saturday, August 313st at 12 p.m.
Um … I think you meant to say “August 313th” — unfortunately, I’m going to be out of town that day.
If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message. 🙂
Photo Credit: stock photo
Prudence, fiscal responsibility, priorities, living within one’s means, the value of work and savings, and leaning to say no. This list is what the return to a gold standard implies. Could it also be called, sound and capable fiscal management? Discipline? But I’m not too sure if the average citizen of the western world wants to hear this. For decades we have been told in every venue imaginable ‘we can have it all’; by product advertisers, politicians. etc etc. Disneyland is a prime prime example of this. My in-laws used to take their son to Disneyland LA, when they could ill afford to do so. Airfare, accommodation, tickets, meals,and this done so many times while he was growing up because they believed it showed them to be caring parents doing something special and deserved…..something that everyone else was doing. Meanwhile, they could barely pay rent and bought vehicles ‘on time’.
Individuals, because the Govt sure as hell won’t do it, can put themselves on their own gold standard by making responsible choices and eschewing debt unless it is for something truly important……like a modest within your means home, sensible transportation, maybe camping trips instead of Disneyland? Just a few ideas.
I remember being in my thirties with two small kids. My wife was at home because day care costs, even 40 years ago, made her working a wash. We just sucked it up and lived within our means in every way possible, and I was a blue collar all the way through. Sorry to say, no Disneyland:-)
I would imagine many readers of Len’s blog are worried about the crazy irresponsibility in the financial world of today. Maybe we just have to go it alone in our own small way. If I/we think it is unsustainable and going to possibly collapse, this debt based fiat currency model, then why not prepare for that eventuality and not wait for the collective to do it for us, and for everyone else.?
I would love to read how other people have done this in our different and varied lives?
Good cuppa, Len.
Wise words, Paul. And thank you.
Hi Len!
Thanks for another delicious cuppa!
Call me crazy but I think the gold is all there in Ft. Knox. Yes I know they won’t do a proper audit. I just find it hard to believe they would allow the gold to be sold under the nose of the American people, who are the actual owners. (Wait. I just think I convinced myself the gold IS gone!) LOL!
Have a great weekend everybody!
Sara
I think there is some gold at Fort Knox – but I also believe much of it was surreptitiously sent abroad between 1971 and 2008 to help keep gold prices under control.
You all can call me a conspiracy theorist if you like, but I think the kooks are those who insist nothing is amiss despite the fact that the US government has steadfastly refused to conduct a thorough independent audit of its own gold reserves for more than 70 years.
Len, that donkey was ADORABLE! Thanks for the video.
My pleasure, Susan. I got it from the Honeybee.
Good round up this week. Let’s see – if you are a family with two kids and you pay $194 per ticket, that’s almost $800 just to get past Disney’s front door. Then there is the food, drinks, souvenirs, etc. No thanks.
Lots of other options out there that are just as fun (if not moreso) and far less expensive.
Totally agree, Timmah. Somebody mentioned that it was actually cheaper to take the family to a Caribbean island for four days than spend the same amount of time at Disney World. That doesn’t sound like hyperbole to me.
Good cuppa, Len! I agree with Paul; we were also a 1 income family that took our kids camping on vacation (AFTER saving up the $ to do so.) We showed them America with our little pop-up camper, and imo they’re better for it than a trip to Disney.
We went to Disneyland once as children; they used to have “Navy Night”, limited to Navy personnel and their families at a cost of $3 per person. That was during the Vietnam war, no idea if they still do it.
Hi Lauren! My best memory of childhood vacations were our many cross-country road trips – not our visits to Disneyland. I It helped that much of our cross-country travels were off the Interstates and instead on the older two lane US highways.
When I was a youngin’ – and Disneyland was much less popular – we too got to experience Disneyland every year on a special night where they limited attendance (I think it was between 8 pm and 1 am) to the families who worked for my Dad’s old employer. I’ll bet Disney hasn’t done those special park closings in many decades!
Did you see that Janet Yellen went grocery shopping? 2 carts, new reusable bags and six security guards. Everything is fine. Lol. Thanks Len, early July 4th blessings.
Thank you, CO2 … and I saw that Janet interview too. And she actually had the nerve to say that prices were not outrageous. Talk about someone who is completely out of touch with reality!
Excepting pols who are mentally ill (dementia, etc.), I think pols generally are aware of reality. But pols are determined to preserve themselves and their party in power. Their role in life is to say and do everything to that end. They are role models for an anti-ethical life.
Loved the “The economy is so bad” statement, some real zingers. Only one I disagree with is the one about CEO’s. CEO seemingly always come out on top….
I’d be interested in your take on the effect of the raise in California’s minimum wage. I have heard both “businesses are failing, moving out of the state. CA is horrible” as well as, “yes there are business failures, but not significantly above the norm. The loss of marginal business does not outweigh the gain in higher wages” The response depends on the source. Hard to find reliable econ data…
Another inflation item… I do a lot of cycling. Have you been in a bicycle shop lately? Wow… “Our entry level model is $700+ (but you really don’t want to ride that piece of junk), you really need to start with the $1,500 model….
Thanks, Frank.
Re: The increase in California’s minimum wage law. I know this: In a desperate attempt to contain labor costs, most fast food restaurants now are operating with only 2 or 3 employees even at peak hours; so it takes forever to get your order and the prices are higher than ever. Late night I’ve actually seen one place with a single employee working. It’s crazy. The fast food industry here is now spiraling into the ground. I suspect many many places will be permanently shutting their doors within a year.
As for bike shops, I used to be a very serious mountain biker before I got married, but no more. I haven’t been in a bike shop since I bought my kids’ last bikes … probably 15 years ago or so.