Black Coffee: Cooked 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?

There is a simple rule of life: Beyond a certain point, complexity is fraud. You can apply that rule to social programs – but you can also apply it to credit derivatives, hedge funds, and all the rest.

– PJ O’Rourke

Because gold is honest money, it is disliked by dishonest men.

– Ron Paul

 

Credits and Debits

Debit: Did you see this? It was already known that there are far more Social Security numbers that have been issued than Americans who have existed since the inception of the program. But the latest DOGE audit led by Elon Musk has uncovered this: More than 10 million people aged 120 or older are on record with the Social Security Administration as still being alive. No, really. The big question is: How many of them – or more appropriately, their grifting surrogates – are still officially collecting benefits? And the next biggest question: Who are the people who are going to complain about Elon uncovering all this fraud, waste and abuse anyway?

Credit: In other news, a man is raising the stakes in his years-long battle to get back the hard drive that contains a discarded bitcoin key worth somewhere around $800 million by offering to purchase a landfill in Great Britain in an effort to find the wallet before the dump is permanently closed. The man previously offered to fully fund the excavation process and share 25% of his gains with the city. Alas, the council wasn’t interested. No word on whether it was because they’d be looking for a needle in a haystack – or because their role as fiduciaries prohibits them from betting on highly-speculative assets of dubious value.

Credit: Maybe that fear of misplaced hard drive is why Fed chair Jerome Powell testified before Congress last Tuesday that the Fed will not develop its own digital currency as long as he is in charge. Wait … what? Then again, anyone who thinks CBDCs offer a realistic solution to America’s debt problem probably thinks this is based in reality too:

Credit: Let’s turn to the world of real money, where we see that the yellow metal has delivered impressive returns over the past 12 months. How impressive? Well … how’s 46% sound? That’s nearly double the S&P 500’s gains. Meanwhile, it’s still taking those in charge of the London gold vaults up to eight weeks to deliver the yellow metal to people wanting delivery. If we didn’t know any better, that sounds like the London gold vaults are empty – even though we’re being told there’s plenty of metal for everyone who wants it. Heh, riiiiiight …

Credit: Needless to say the S&P 500’s performance hasn’t been lacking; it’s up 57% in the last two years. However there’s a fly in the ointment: fully 75% of that gain can be attributed to the so-called Magnificent Seven which is comprised of the following companies: Alphabet (Google), Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. Quite frankly, those who are insisting that this is perfectly acceptable for a healthy market make about as much sense as a driving dog. Oh, wait …

Credit: The absurd size of the current stock market bubble has left Jim Quinn shaking his head. He notes that, “Mom and pop investor sentiment is now at an all-time high. Many of today’s addled attention-deficit  investors have never experienced a real bear market. Margin debt is near an all-time high. The smart money is exiting, while billions are pouring into the market from the dumb money crowd. They’ve forgotten how they got fleeced in 2001 and 2008. Oh well. Maybe they’ll learn this time.” Maybe. But we sincerely doubt it, Jim.

Debit: While everyone loves rising stock prices – at least if they own them – nobody loves higher prices for everyday living expenses. With that in mind, US consumer prices – driven by rising shelter and food costs – jumped 0.5% in January, marking the sharpest monthly increase since August 2023. The good news is: Everybody’s credit cards still appear to be working. So there’s that.

Debit: Unfortunately, this stubbornly-persistent and rising inflation has set the stage for stagflation, an extremely painful economic condition marked by soaring inflation, stagnant economic growth, and rising unemployment. The last time the US experienced stagflation was during the 1970 shortly after the US dollar’s (USD) anchor to gold was severed, which led to rapid growth of the currency supply. That, in turn, decimated American living standards with debilitating price hikes for everyday living expenses, crippling energy crises, and disco music. But other than that, the 70s were a truly wonderful decade.

Credit: By the way, once stagflation takes root, it’s really hard to get rid of it. Kind of like the kudzu that now covers much of the eastern US. In fact, macro analyst Jesse Columbo warned this week that, “If stagflation returns, the Fed will find itself in a difficult predicament, as its ability to implement monetary stimulus will be constrained by high inflation.” As such, he expects the Fed will ultimately be forced to prioritize the economy over inflation control – although we fail to see the wisdom in that decision. After all, for most people higher prices leads to lower living standards whether you are employed or not. Not that the Fed really cares …

Credit: One solution gaining rapid credibility is the establishment of a new sovereign wealth fund (SWF) backed by gold. As macro-analyst Vince Lanci points out, “Revaluing gold and monetizing it via a SWF functioning as a debt retirement vehicle offers a path to debt reduction without sacrificing market stability. With a SWF, gold is reasserted as an anchor asset, bonds are preserved as a core funding tool, and the dollar retains its primacy – albeit with enhanced credibility.” But the most intriguing question remains: At what will the US ultimately decide to revalue the yellow metal? Well … unless you’re one of these people:

Credit: Needless to say, none of this matters if the world doesn’t believe the US has all the gold it claims. Maybe that’s why this week the Russian media had this to say on the topic: “No one can confirm how much gold the US holds — or if it’s even in the vaults. With BRICS advancing de-dollarization and zero audits since 1974, Fort Knox’s secrecy isn’t just a mystery – it’s a fiscal time bomb.” That it is. The good news is in the meantime we can protect our hard-earned nest eggs by becoming our own central bank and purchasing a little wealth insurance of our own in the form physical gold.

The Question of the Week

Last Week’s Poll Results

What type of rewards does your primary credit card offer?

• Cash back 58%
• Airline miles 15%
• Something else 10%
• I don’t have a rewards card 9%
• Hotel points 8%

More than 1200 Len Penzo dot Com readers responded to last week’s question and it turns out that 1 in 3 people say their rewards card offers something other than cash back. Shockingly, 1 in 11 don’t have a credit card that offers any rewards card at all. Wow. Talk about a missed opportunity!

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.

By the Numbers

A new study is out that determined the top jobs that Americans demanded in 2024. The results are based upon the average monthly volume of Google requests over the past 12 months of various terms related to job searches in America. According to the study leader, “The data reveals that some of the most attractive jobs are those that combine working with a hobby or interest of the individual, such as traveling, photography, or working out at a gym.” Frankly, we think it’s quite an eclectic mix of jobs, which makes the study hard to take seriously. But, hey, you never know:

7310 Photographer

7800 Music manager

8800 Business administrator

8840 Party planner

9110 Electrical engineer

9120 Event curator

11,060 Data & compliance manager

18,000 Personal trainer

19,000 Pundit

22,050 Silversmith

Source: GoJoe

Useless News: Math Test

A football coach walked into the locker room before a game, looked over to his star quarterback and said, “I’m not supposed to let you play since you failed math, but we need you on the field tonight. So, what I have to do is ask you a math question, and if you get it right, you can play.”

Seeing that he had no other choice, the player reluctantly agreed. The coach then looked into his eyes intently and asked, “Okay, now concentrate as hard as you can. Tell me the correct answer to this: What is two plus two?”

The player thought for a moment — and then he thought for a couple more. Finally, with everyone in the locker room on a knife’s edge, the quarterback reluctantly answered, “Four?”

“Did you say ‘four’?” the coach exclaimed, excited that his star player got it right.

Just then, all the other players on the team began screaming, “Come on coach! Give him another chance!”

(h/t: Sam I Am)

Squirrel Cam

On Thursday I was late getting the walnut banquet out and that left Rebecca (who had a litter last month) wondering what the heck was going on …

.s

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!

.

More Useless News

Here are the top five articles viewed by my 50,511 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

1. 8 Practical Mindful Money Management Strategies
2. 10 Easy Ways to Save Big Money Everyday
3. Dora the Explorer’s Five Easy Steps to Financial Health
4. What is GAP Insurance for Cars and When Should You Buy It?
5. 9 Preventative Car Maintenance Tips That Will Save You Money

Hey, while you’re here, please don’t forget to:

1. Subscribe to my weekly Len Penzo dot Com Newsletter! (It’s easy! See the big green box in the sidebar at the top of the page.)

2. Make sure you follow me on follow me on X (Twitter).

3. Become a fan of Len Penzo dot Com on Facebook too!

And last, but not least …

4. Please support this website by patronizing my sponsors!

Thank you!!!! 😊

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

From Alicia:

Love the blog! How come you didn’t give it a catchy name like some of the other personal finance sites I read?

Well, to tell you the truth, Alicia … “Len Penzo dot Com” seemed pretty catchy at the time.

If you enjoyed this, please forward it to your friends and family. 😊

I’m Len Penzo and I approved this message.

Photo Credit: public domain