Black Coffee: Buy Now. Pay Later.

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?

Debt is the secret foe of thrift, as vice and idleness are its open foes. The debt-habit is the twin brother of poverty.

– Theodore Munger

Good times are when people make debts to pay in bad times.

– Robert Quillen

Credits and Debits

Credit: Did you see this? It has been almost ten years since Sam’s Club – which is WalMart’s version of Costco – launched “Scan & Go, an application that allows its members to scan and pay for their products using their cell phone. Now the store is going to the next level, as they plan to completely phase out traditional checkout stands in order to create “friction-free” shopping with the addition of an artificial intelligence (AI) scanner at the exit to verify their customers’ purchased goods as they leave. Well … at least the customers who are still willing to stick around.

Debit: In other news, Wall Street celebrated as stock market investors decided to buy the dip. The good news is that, for the week, the Nasdaq rose 6.7%, the S&P 500 climbed 4.6% and the Dow finished 2.5% higher. With these latest gains, Nasdaq is now slightly positive for the month, but the S&P 500 and Dow are still down month-to-date 1.5% and 4.5%, respectively. The bad news is that all three major indices still appear to be in the middle of a frustrating bear market rally where the indices merely end up painting a series of not only lower highs – but lower lows too.

Debit: Meanwhile, back on Main Street, the Philly Fed Manufacturing Business Outlook survey crashed to its weakest level in two years. Not coincidentally, new orders also fell sharply in March – to its lowest level in 5 years – while the prices paid index edged up to its highest reading since July 2022. Um … can you say “stagflation”? Never mind that the Fed says their models show no sign of it. Then again, the Fed also said in 2021 they saw no evidence of high inflation. The good news is, there’s at least one politician out there who is paying attention – and she has a “solution” that’s so “good” it’s hard to believe nobody ever thought of it before …

Debit: Of course, slowing demand and rising prices seem counterintuitive. But that scenario is entirely possible with out-of-control government debt accrual and a Fed willing to finance it via a rapidly-expanding currency supply. In fact, since 2000, the US National Debt has soared more than sixfold, from under $6 trillion to a staggering $36.7 trillion today – and that figure is now growing by $1 trillion every 100 days. And yet, somehow, we keep rollin’ down the highway without a care in the world. Oh, wait …

Debit: On a related note, most people are unaware that the US didn’t experience persistent, steady inflation until after the Fed’s inception in 1913. From that point forward, the Fed gradually implemented monetary policy decisions that ultimately debauched the US dollar (USD) – resulting in its steadily eroding purchasing power and, eventually, a falling American living standard. Unfortunately, the pain resulting from higher living costs was numbed for the last several decades with cheap imports. A treatment that, as Ross Perot – and later Warren Buffett – correctly warned, would work great … until it didn’t. (Pro tip: It doesn’t anymore.)

Credit: That’s right; with few exceptions, the period between the end of the Civil War in 1865 and the turn of the 20th century saw prices for most goods and services remain steady – or slightly decline. As a result, Americans’ living standard during this period improved markedly. It’s not a coincidence that the US was on a gold (and silver) standard during this time frame. If you don’t believe us, check out this chart from the Fed itself, annotated by market analyst Jesse Columbo. Keep in mind it is based on the US Consumer Price Index (CPI), which has terribly understated the inflation rate since 1980. The good news is the market has come up with a way to “help” …

Credit: As Mr. Columbo points out, a better way to understand just how debauched the USD has become is to realize that, as late as 1933, $1000 would buy almost 50 ounces of gold. “But as the USD was gradually debased,” he says, “it bought less and less. Today, $1000 purchases just 0.31 ounces of gold. That represents a staggering 99% loss in the USD’s purchasing power relative to gold over the past century.” Oh … and speaking of lost purchasing power …

Credit: For those not counting at home, based on the current US M1 money supply – and assuming the US has all of the 8133 tons of gold it claims to hold in its vaults (we know; but just play along) – Mr. Columbo estimates that the USD price of gold would need to be revalued to $70,861 per ounce for 100% backing, and $28,344 per ounce for the 40% backing that the Fed was originally required to maintain by law. Is this man crazy? Or is he crazy like a fox?

Credit: As for the most-recent impressive surge in the USD price of gold this month, macro analyst Vince Lanci says the yellow metal is now “reacting not just to the trade war, but to the trade war as a solution – a (final) global race to the bottom” that will be unleashed when the Fed panics and finally begins lowering interest rates. Again.

Credit: We’ll end this week with an astute – if not provocative – observation from Paul Craig Roberts. He notes that, “From their inception until 1913 … Americans were still a free people. (But) the introduction of the income tax and the Fed in 1913 – two disastrous events in American history – turned free Americans into serfs of the government. Your labor – and the income from it – no longer belongs to you. Your ‘constitutional democratic’ government, has the same claim to your labor as a feudal lord had on a serf’s labor in the medieval era.” It’s definitely something to think about, folks. But as you do, please try to control your emotions …

Debit: By the way, Mr. Roberts wasn’t finished. He also pointed out how the government has managed to keep us serfs mollified: “Imagine (Americans) view toward the income tax if they had to pay the full amount annually on April 15. If you hadn’t been withheld, you’d be faced with an income tax payment the size of a mortgage payment, car payment, and credit card payment combined. Your view toward the government wouldn’t be the same as the view that results from being handed a refund.” True dat. The good news is that you can still maintain at least a little freedom by ensuring that you keep at least a small portion of your long-term savings in gold.

The Question of the Week

Last Week’s Poll Results

How many TV sets are in your house?

• One 25%
• Two 21%
• Three 19%
• More than four 14%
• Four 13%
• None  8%

More than 1200 Len Penzo dot Com readers responded to last week’s question and it turns out that 1 in 3 of you have, at most, a single TV in the house. Compare that to slightly more than 1 in 4 of you who have four or more. We have five in our house – but only two of them are used regularly.

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 analyzed criminal fraud in America. Here were the ten states with the highest reported incidents of fraud per 100,000 people last year:

316 New York

318 Illinois

339 New Jersey

349 South Carolina

350 Texas

416 Delaware

424 Maryland

425 Nevada

463 Florida

464 Georgia

Source: Tableau Public

Useless News: Tailgate Tale

The light turned yellow, just in front of him. He did the right thing and stopped at the crosswalk, even though he could have beaten the red light by accelerating through the intersection.

Meanwhile, the tailgating-woman behind him was furious and honked her horn, screaming in frustration, as she missed her chance to get through the intersection. As she was still in mid-rant, she heard a tap on her window and looked up into the face of a very serious police officer.

The officer ordered her to exit her car with her hands up. He took her to the police station where she was searched, fingerprinted, photographed and placed in a holding cell.

After a couple of hours, a policeman approached the cell and opened the door. She was escorted back to the booking desk where the arresting officer was waiting with her personal effects.

He said, “I’m very sorry for this mistake, ma’am. You see, I pulled up behind your car while you were blowing your horn, giving the guy in front of you the finger and cursing at him. I noticed the ‘What Would Jesus Do’ bumper sticker, the ‘Choose Life’ license plate holder, the ‘Follow Me to Sunday-School’ bumper sticker, and the chrome-plated Christian fish emblem on the trunk, so naturally I assumed you had stolen the car.”

(h/t: Dave)

Squirrel Cam

Who says squirrels can’t be polite? In this clip, Rita barges in on a young squirrel who was quietly enjoying a little breakfast, which the youngster tolerates without a fight. As she leaves, an appreciative Rita doesn’t forget to offer up a squirrel “thank you.”

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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 51,173 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

1. 5 Online Side Hustles You Can Make With Minimal Investment
2. Credit or Debit? How the Wrong Choice Hurts Small Businesses (and You)
3. 5 Affordable Ways to Upgrade an Outdated Bathroom
4. 6 Big Home Seller Mistakes That Turn Off Potential Homebuyers
5. No Joy in Mudville: Teaching My Son About Payback Periods

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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

Here’s a rather odd message I received in my inbox this week from Joriss:

Your blog is a total squander of time!

Let me guess: You’re a professional fortune cookie writer.

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