Black Coffee: Midnight Oil

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 …

A formula for success: rise early, work hard, strike oil.

– JP Getty 

The good Lord put oil and gas there for us to find and use, and we’d better do it.

– Red Adair

 

Credits and Debits

Credit: Did you see this? A single barrel of oil contains the energy equivalent of all the physical labor that a man can do in 10 years. As macro analyst David Jensen points out, this improved the standard of living around the world because “hydrocarbon-fueled engines allowed work that previously required gangs of men and horses to be accomplished by a machine run by a single operator in a much shorter time.” When it comes to energy efficiency, only nuclear fission (and fusion) can compete. Despite this fact, there are those who are pushing to eliminate all fossil fuels.

Debit: By the way, Jensen also notes that Germany is one nation that’s been working feverishly to sharply reduce its reliance – if not outright abolish – fossil fuels. As a result, almost half (47%) of Germany’s electrical grid is now powered by wind and solar generated electricity. Compare that to the US, where just 14% of all electrical power is generated by by the wind and sun. Now for the punchline: Electricity prices in Germany for industrial customers are 300% of those for industrial customers in the US while diesel fuel prices in Germany are 200% US prices. Not surprisingly, the “green” energy push has led to national deindustrialization.

Credit: Over on this side of the pond, the S&P 500 and Dow closed August with gains of 1.4% and 2%, respectively, marking four straight month of gains for those indexes. The Nasdaq also capped August with a 1.6% gain in its fifth straight winning month. Just remember, it doesn’t matter if the stock market is in a bull or bear market, or whether stocks are rising or falling on any given day. There are always going to be winners… and, um, losers.

Debit: One thing is certain: Wall Street couldn’t care less about the United States’ structurally-intractable debt problem. After all, they’re more concerned with corporate revenue and consumer purchasing power. With that in mind, macro analyst Tavi Costa opined this week that, “Sometimes I stop and think how absurd it is to claim inflation is decelerating while the government runs a 7% fiscal deficit.” Indeed. Then again …

Debit: Of course, with the Fed signaling rate cuts are coming next month, Americans may want to brace for higher prices in almost everything pretty soon. For more details, we refer you to an expert in the field …

Debit: Needless to say, the Fed has completely mismanaged the US dollar (USD). Never mind that many would say the US government is technically insolvent. But don’t worry — as the MMT academics assure us: 1) we owe most of that debt to ourselves; and 2) the Fed can always print as much cash as it needs to pay its obligations. That is, as long as everybody ignores the fine print …

Debit: On the other hand, the Fed’s incompetence shouldn’t be surprising when you consider who makes up its board of governors. In fact, not one, not two, but three governors have resigned since 2021 after being busted for suspicious stock trades. A fourth Fed governor, Lisa Cook, was just fired by the president for what clearly appears to be blatant mortgage fraud. For now, she continues to defend the indefensible and is refusing to leave – so the coming days and weeks should be extremely entertaining …

Credit: The tide of gold bullion, commodities, and commerce is no longer flowing to the aging imperial ports of the West, but toward a rising consortium of resource-laden, market-hardened economies intent on securing the world’s wealth under their own flags. By the end of this year, the BRICS nations will command 41% of global output in purchasing power terms – surpassing the old developed G7 market powers, who now control just 28% of the world’s economic trade and production.

Credit: On a related note, a recent article at GoldSilver says that China”is quietly steering its people and government away from the USD. Citizens are being nudged to buy gold, while the state builds a parallel trade and finance system that skips the dollar altogether (via) two converging tracks: a gold-backed domestic savings base meets a yuan-powered foreign trade engine, creating a new, stable financial middle ground.” Uh huh. Hey, folks… like it or not, it’s a very sound monetary plan. Unlike the phony one that the US has been relying on since 1971.

Credit: Not surprisingly, the new BRICS system being put in place will be similar to the old Bretton Woods system – but without a fixed gold price. GoldSilver also notes that, “the system’s design nudges countries onto one of two paths: invest in your own economy and watch your currency strengthen or stick to exporting raw materials and become China’s economic satellite, much like how the US rebuilt Germany and Japan after WWII – except now China’s the one doing the financing and franchising.” In other words: There seems to be a new sheriff in town. Unfortunately, the general public still isn’t paying attention.

Credit: The ugly truth for those who continue to keep the faith in the current debt-based fiat monetary system is that in an age of money printing and fiscal dominance, the only safe harbor lies in real assets: equities, real estate, and gold. Because when the value of money becomes negotiable, tangible value is the ultimate refuge. Got gold?

By the Numbers

With 8.8 million Americans having at least one credit account where they are late on their payments (or have been allowed to delay them), a new study revealed the ten states with the fewest per capita delinquencies.

10 Wisconsin

9 Maryland

8 Maine

7 New Jersey

6 West Virginia

5 New Mexico

4 Oregon

3 Alaska

2 Vermont

1 Hawaii

Source: WalletHub

The Question of the Week

Last Week’s Poll Results

• No   39%
• Yes   37%
• Meh   24%

More than 1900 Len Penzo dot Com readers responded to this week’s poll and it turns out that slightly more than 3 in 5 either dislike camping or, at best, lack enthusiasm for roughing it in the great outdoors. You can put me firmly in the “hate it” category.

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: Camping Trip

One day Sherlock Holmes and Dr. Watson decided to go on a camping trip. After a long first day of enjoying the great outdoors, they set up their tent, and fell asleep.

Some hours later, Holmes woke his faithful friend. “My dear Watson! Look up at the sky and tell me what you see.”

“I see millions of stars.” Watson replied.

“And what does that tell you?” asked Holmes.

Watson pondered the question for a long minute. Finally, the good doctor turned to his friend and said, “Astronomically speaking, it tells me that there are millions of galaxies and potentially billions of planets. Astrologically, it tells me that Saturn is in Leo. Time wise, it appears to be approximately a quarter past three. Theologically, it’s evident the Lord is all-powerful and we are small and insignificant. Meteorologically, it seems we will have a beautiful day tomorrow. What does it tell you, Sherlock?”

And with that, Holmes looked at his partner and said: “Watson, you idiot! It means someone stole our tent!”

(h/t: Susan)

Squirrel Cam

This is Ricky. Earlier this week he was trying to get our attention to let us know that we were late in putting the picnic table out…

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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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(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

This week I got some exciting news from Francis Egoyibo, an officer for the Office of the Accountant General:

The Auditor-General for the country of West Africa has determined that you are owed $9,241,000.66. We would like to know how you wish to be paid …

Great! Please send a check for the entire amount to the IRS as an advance tax payment on my future income.

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