Black Coffee: Cooking the Books

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 hope everybody had a wonderful week. And with that, let’s get right to this week’s commentary, shall we?

Facts are stubborn, but statistics are more pliable.

– Mark Twain

Don’t trust any statistics you didn’t fake yourself.

– Winston Churchill

Credits and Debits

Credit: Did you see this? Grocery chain Kroger is expanding its use of digital price tags known as electronic shelving labels (ESLs). A typical supermarket has roughly 30,000 items; as a result, the company says that ESLs can reduce grocery stores’ labor expenses by allowing stores to reallocate the time and labor of stockers who would be manually changing labels to other activities. That’s not to say there aren’t plenty of people who are against it …

Credit: Speaking of prices, here’s sagacious macro commenter Franklin Sanders: “Of all the well-known facts from history and economics, at the top of the list stands this one: Price controls never work and always create shortages.” Remember that the next time you hear a politician propose them to control prices, as one of them did last week regarding soaring grocery and meat prices. Sadly, there is a large segment of any society that never seems to learn …

Credit: By the way, Mr. Sanders also reminds us that, “Y’all can confidently expect the shortages to appear even before such controls are imposed, since any whiff of controls will prompt the prudent to hoard while there is still something to buy. The only abundance socialism can create is an abundance of shortages — oh, and corpses.” Amen. In the meantime …

Debit: In other news, the fast-food value-meal war has been going on for a while now, and the Subway sandwich chain has become a casualty in the spiraling price battle. Why? Because an emergency meeting was called with franchise owners last week to discuss plummeting sales. Business has been so bad that one Subway owner said same-store sales were down 5% to 10% in recent weeks compared to the prior year, while “gross sales are not even at 2012 levels – and profit then was five times what it is today.” Yikes. That’s certainly stressful for Subway’s franchisees, but nowhere near as bad as this …

Debit: Of course, fast food sales aren’t the only economic weak spot in America at the moment – the job market is too. In fact, the US government is now admitting that the labor market is – and was – far weaker than they’ve been claiming during the past 12 months. That’s because the Bureau of Labor Statistics announced this week that its worthless bureaucrats had overstated payrolls by 818,000 jobs over the last year. Heh. Imagine that. Then again, something tells us this “revision” will be “revised” further downward early next year. On the bright side, the government says the US still isn’t in a recession either. For what that’s worth.

Credit: Believe it or not, before the US dollar’s (USD) gold anchor was broken in 1971, there was almost zero credit card debt; it’s $1.1 trillion today. Sadly, macro analyst Doug Casey observes that today, “The average guy no longer thinks about producing more than he consumes and saving the difference. He can’t do that with a rapidly inflating paper currency. He just tries to keep his head above water with debt. And if he has a few extra bucks, he tries to get lucky in the stock market.” Yep. Or one of those highly-speculative crypto coins.

Debit: On a related note, global debt reached another all-time high in the first quarter of 2024 – the latest figure is officially $315 trillion. Now for the punchline: Debt has surged worldwide by 21% since the pandemic, boosting global debt by $54 trillion. More than $94 trillion of that debt today is held by non-financial corporations, while governments are $91 trillion in the hole, and the financial sector owes $70 trillion. Incredibly, households around the world are also drowning in a $59 trillion sea of red ink. We’re sure things would be a lot different if only people would pick up a personal finance book and read it  …

Debit: Unfortunately, the global debt situation is even worse than it seems. Why? Because when you include debt derivatives, then the total global debt load isn’t $315 trillion – it’s more than $2 quadrillion! And that’s a problem because the entire world floats on a sea of credit. As Mr. Casey notes, the entire debt complex “is a daisy chain; if one part of it breaks, and one person can’t pay, the next person can’t pay either. So the system has become extremely over-financialized.” True. But, to be fair, a lot of things have changed for the worse over the years …

Debit: Alas, all our debt problems would disappear if they could simply mint a bunch of trillion-dollar coins to get rid of all that debt. Yes, we’re being sarcastic – but that hasn’t stopped the government from actually considering such a stupid idea. You know the scam by now; the US Treasury would mint the coins and deposit them with the Fed, whereupon the central bank could create and distribute USDs matching those trillion-dollar deposits. Never mind the resulting price inflation that would unleash. It’s a sick idea. Yes; even sicker than this:

Credit: Ironically, as macro analyst Chris Powell observes, the fraudulent “trillion-dollar coin idea is similar to a policy change that gold advocates long have been rooting for: a formal revaluation of gold by governments and central banks.” That’s because properly revaluing the yellow metal – unlike minting a handful of trillion-dollar coins – would legitimately devalue government debt and society’s debts generally while reliquifying government Treasuries and central banks.

Credit: Needless to say, the declining purchasing power of the USD is a big reason why physical gold is increasingly showing signs of reclaiming its role as the premier safe have from sovereign bonds. Then again, when it comes to preserving purchasing power and long-term wealth, gold has always the premier safe haven. It’s just that very few people become informed enough to ever realize it …

Credit: It’s no coincidence that the percentage of central banks viewing gold as a strategic asset has increase from 12% in 2020 to 71% today. As macro analyst Egon Von Greyerz points out, that “clearly indicates their intended exit from USDs as a reserve asset to gold.” We’re constantly giving central bankers a lot of grief here for mismanaging the USD into oblivion. But the world’s central banks know that the fiat currencies they issue are intrinsically worthless – which is why they’ve doubled their gold purchases since 2012. It’s also why they’ve announced they’ll be increasing their gold purchases over the next few years. If they’re buying gold, maybe you should too.

By the Numbers

Analyzing data from Google Trends, researchers calculated the share of searches in each state containing the phrase “gold prices” relative to those containing “stock prices” between 2019 and 2024. With that in mind, here are the ten US states with highest percentage of Google searches that were more interested in gold prices than stock prices:

10 South Dakota (Relative search interest for gold prices: 61%)

9 New Hampshire (62%)

8 Oregon (63%)

7 Utah (64%)

5 (tie) Idaho (65%)

5 (tie) Arizona (65%)

4 New Mexico (66%)

3 Nevada (67%)

2 Montana (68%)

1 Alaska (76%)

Source: US Money Reserve

The Question of the Week

[poll id="550"]

Last Week’s Poll Results

Do you mow your own lawn?

• Yes (57%)
• I don’t have a lawn. (34%)
• No (9%)

More than 1800 Len Penzo dot Com readers responded to last week’s question and it turns out that, among those who have a lawn, 86% mow it themselves. As for the other 14%, they either hire somebody to cut their grass for them – or have a home with the worst curb appeal in their neighborhood.

This week’s question was submitted by reader Frank. 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.

Useless News: One Versatile Word

(h/t: The Honeybee)

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 five articles viewed by my 49,111 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

1. My 16th Annual Cost Survey of 10 Popular Brown Bag Sandwiches
2. Gas or Charcoal Grills: Which Is More Cost Effective?
3. What Are the Most Common Birthdays?
4. My Dumbest Money Mistakes
5. A Real Life Example Why Every Homeowner Needs a Hefty Emergency Fund

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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

After reading a Len Penzo dot Com article explaining the what every homeowner should look for in a pest control company, Eric left this comment:

You should know that some of the chemicals pest companies use can harm the surrounding environment as well as the local inhabitants.

Yes … especially when those local inhabitants are cockroaches and bedbugs.

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