Black Coffee: Fix It Again Tony

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 …

The mechanic that would perfect his work must first sharpen his tools.

– Confucius

In 1971, the US closed the ‘gold window,’ starting an unprecedented era of global fiat money. Never before had the world operated on the basis of no country anywhere having a currency tied to gold.

– Max Keiser

The worst car I’ve ever owned was a Fiat X19.

– Ant Anstead

Credits and Debits

Debit: Did you see this? Over the past year, Target management has complained on earnings calls about so-called ‘shrink’ – that is: “theft” – that has squeezed their profit margin. As a result, management is instituting a new policy this month that will permit employees to intervene and halt criminals from leaving the store with as little as $50 in stolen goods; the previous threshold was $100. So thieves will soon have to make two trips to Target instead of one. Heh. I wish somebody would tell these thieves that, if they were truly creative, five-finger discounts wouldn’t be necessary …

Debit: In other news, a new study has determined that the cost of living in some American cities has skyrocketed so much that retirees who expect to live in them for 25 years now need more than $3 million to be considered “wealthy.” Of course, it all depends on which city one chooses to retire; but suffice to say that among America’s 50 largest cities, if you plan on retiring rich, you’ll need $975,000 at the low end and $4.7 million at the high end. Especially if you enjoy restaurant dining. Just be careful what you order …

Credit: So … how does one go about retiring rich? More than 70% of wealthy investors between 21 and 43 no longer think it’s possible to achieve above-average returns by investing exclusively in a traditional mix of stocks and bonds; in contrast, only 28% of Gen X and Baby Boomer investors share that view. As a result, younger investors are more likely to buy alternative assets. For example, 49% of millennial and Gen Z investors own cryptocurrencies, and 45% own physical gold, compared to less than 2% of all US investors whose portfolios include the yellow metal. Hey … you can scoff at those young investors, but their strategy certainly has a higher success rate than this:

Debit: In the meantime, 55-year-old Americans have a median retirement savings of less than $50,000. That’s bleak news for Gen Xers who are less than a decade away from retiring. It’s also a far cry from the target of having eight times your annual income saved by this age. (For you Gen Xers who earn $6250 annually, we apologize for lumping you in with those other Gen X deadbeats.) That being said, to be fair, every generation has its share of ants and grasshoppers. Different strokes for different folks, and all that jazz …

Debit: By the way, it’s not just the future that looks grim for Gen X; they’re just squeaking by right now: A new survey has found that more than one-third of 55-year-olds admit that they don’t have $400 to cover an emergency expense. Contrast that with 19% of 65-year-olds, and 15% of 75-year-olds. On the bright side, we’re sure they can discuss ways to improve their financial situation over a little lunch. Oh, wait …

Debit: Not surprisingly, regardless of which generation your from, it takes the typical American household $1069 more a month just to purchase the same goods and services that it did three years ago. And if you think that’s bad, you probably don’t want to know how much more expensive life has become since the the US dollar’s (USD) anchor to gold was broken back in 1971. Then again, if you’re the curious type, just ask the Kremplers …

Debit: Despite home prices still stubbornly stuck near all-time highs in most of the US, the latest housing market data shows that pending US home sales plunged to a new record low. Yes; it’s hard to believe but pending home sales are now lower than they were at the depths of the COVID pandemic. And it’s the same thing for US manufacturing output, which is also at pandemic lows. No, really. See for yourself:

Debit: Meanwhile, it turns out that, for the first time in its history, the Fed has been steadily losing money since September 2022. How bad are the losses? Well … as of last month, they add up to a cumulative $176 billion. Even more alarming, those losses are separate and distinct from the unrealized losses the Fed is experiencing on the debt securities it holds on its balance sheet. And, yes, we know … the principal is guaranteed at maturity by the US government – but the purchasing power isn’t. That’s because the USDs that are freely printed by the Fed isn’t money at all – it’s an IOU. In fact, it says so on the front of every bill.

Credit: The Fed’s losses prompted macro analyst Bill Holter to note: “So not only is The Fed sitting on huge unrealized losses, they also have a cash operating loss since 2022? And this is the entity that issues the world’s reserve currency? At least now you know why the world has formed a competitive (economic) bloc called the BRICS!” To be sure, it’s another massive monetary mistake for the US, the consequences of which will be felt by the American public, sooner rather than later …

Debit: Speaking of the BRICS, last week their new development bank announced an exciting plan to completely abandon the USD by 2027. That’s less than three years from now. Unfortunately, as far as most Americans’ wallets are concerned, that will end up being as successful as this exciting plan …

Credit: For what it’s worth, the only way to fix the economic mess we’re in is to abandon the fiat USD and return to a monetary system based upon sound money. If the US ever does eventually decide to dig itself out of its debt debacle by backing its debt with the claimed 8030 tons of gold held in Fort Knox and other depositories, that would require a dollar-price of gold at $25,000 per ounce for just 20% gold backing of the dollar – or $50,000 for 40% backing. Then again, if the US actually has less than the amount claimed, those prices will be higher. And in the meantime, please remember that silver is sound money too.

Credit: What we are witnessing is typical of late-stage debt-based currencies’ lifespan: As fiscal policy and public debt spiral out of control, uneasy creditors begin to disappear, leaving central banks to fill credit gaps as the lender of last resort. This continues until the currency becomes so unloved that the government is forced to become the currency’s borrower of last resort – which results in the absurd situation where the government must spend in order to borrow (see: Japanese yen). At that point, only nest eggs holding precious metals and other hard assets will hold their value. The rest, will end up as dust in the wind.

By the Numbers

Among the 50 largest US cities, here are the 10 where you have to save the least if you expect to retire and enjoy a comfortably-rich lifestyle for 25 years. Can you guess which city provides your retirement savings with the biggest bang for the buck?

$1,474,959 Omaha, NB

$1,446,050 Louisville, KY

$1,405,578 Kansas City, MO

$1,394,014 Milwaukee, WI

$1,330,414 Memphis, TN

$1,327,523 Indianapolis, IN

$1,321,742 Oklahoma City, OK

$1,315,960 Tulsa, OK

$1,243,687 Wichita, KS

$1,217,666 El Paso, TX

Source: GoBankingRates

The Question of the Week

[poll id="543"]

Last Week’s Poll Results

When is the last time you visited a Disney theme park?

• More than 10 years ago (29%)
• I’ve never visited one! (20%)
• Within the last ten years (20%)
• Within the last two years (15%)
• Within the last five years (13%)
• Within the last year (2%)

More than 1800 Len Penzo dot Com readers responded to last week’s question and it turns out that 1 in 5 of you have never visited a Disney theme park. That’s one way to save a boatload of money.

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: Money Games

Growing up as a kid, I learned all about capitalism through the board game Monopoly. I mean, what better way to teach a young mind about how our economy functions. I loved this game as a kid — and still do! Only now, as an adult I have some questions that remain unanswered. For instance, if I have all this money and own all this real estate, then why am I still driving around in a thimble?

(h/t: Cowpoke)

Buy Me a Coffee? Thank You!

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More Useless News

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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 out to me at: Len@LenPenzo.com

After reading my article explaining why home monitoring systems aren’t all they’re cracked up to be, Thomas left this comment:

Burglars know that police respond relatively slowly.

You got that right, Thomas. It’s no secret that when seconds count, the cops are always minutes away.

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