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 …
Opportunity does not waste time with those who are unprepared.
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Credits and Debits
Credit: Did you see this? The parents of more than four million children have claimed those new Trump Accounts – tax-deferred investment accounts for children that were instituted in last year’s One Big Beautiful Bill Act. Those accounts include a $1000 contribution from the federal government for all children born to US citizens between Jan. 1, 2025, and Dec. 31, 2028. Keep in mind that if those parents contribute $1000 per year for the child’s first 18 years, the account would be worth approximately $1.5 million by the time the child turns 65 (assuming an ROI of 8% annually) – even if the account never saw an additional contribution. Or you can just take the “easier” alternative …
Debit: The odds are good that those Trump Accounts kids are going to need every dime they earn by the time they retire – especially if they become homeowners. That’s because a new study is projecting that homeowner insurance rates in the US will see more jaw-dropping increases after a string of natural disasters rocked the nation in 2025, with the largest projected rate hikes in California (16%), Nebraska (13%), New Mexico (11%) and Georgia (10%). Last year, some states saw their rates rise even higher, including: Minnesota (34%), Colorado (33%), Iowa (28%), Nebraska (25%), Oklahoma (24%) and South Carolina (20%). Thankfully, there’s a silver lining…
Credit: In other news, 72% of sports fans and 60% of those who say they’re not sports fans feel that sporting events should be required to remain on free broadcast television – not locked behind streaming service pay walls. In fact, the paywall issue has sports fans so incensed that nearly 6 in 10 of them say they’re skipping games rather than subscribing to a streaming service. We don’t blame them. Not that there really bigger potential things to worry about out there…
The Far Side – Gary Larson
Debit: Meanwhile, the private credit fiasco has yet to be fixed, with BlackRock, Morgan Stanley, Apollo Global, and Blue Owl Capital still imposing gating restrictions. Or, as James Howard Kunstler puts it: “investors can’t get all or part of their money out of plays that are folding on collateral rot.” We suspect those restrictions will only be getting tighter in the coming months. Then again, we’re not the only ones with this uneasy sense of foreboding…
Debit: For his part, Fed Chair Jerome Powell has stated several times in the last two weeks that he sees no risk of contagion in private credit markets that could spread to the wider financial system. Translation: Contagion eventually escaping the private credit markets to the wider economy is all but assured. After all, we all know the Fed is as useless as a parrot with a cell phone. Oh, wait …
Credit: Meanwhile, sagacious macro analyst Franklin Sanders did a little research and was “disturbed” to discover that nearly half of all Americans are receiving income from the federal government at some level. “In Texas it was 48%, in South Carolina 65%, and I’m sure that the income source doesn’t differ much from 50% in other states. Roughly 30% earn their income from the federal government whether it’s pensions, social security, or government contracts and another 20% get theirs from state or local government.” Disturbing indeed. On the other hand, things can definitely be worse…
Debit: On a somewhat related note, the US Treasury also released its latest financial statement last week as well. On the credit side of the ledger are $6 trillion in assets. On the debit side are $48 trillion in liabilities, for a negative net worth of $42 trillion. Of course, that doesn’t include unfunded obligations like social security and medicare. That also means that the US government has eight times more debt than the value of everything it owns. If the federal government was an American household, it would be considered insolvent. But since it has the power to print your own currency, very few people bat an eyelash. At least initially…
Debit: Unfortunately, when excess currency is created in excess of the issuing nation’s economic production value, it results in price inflation (and declining purchasing power) for the citizenry. All governments use inflation as their preferred escape hatch from untenable debt because it quietly eats away at the real value of that debt. In other words: Debts remain the same in nominal terms, but the money used to repay them loses purchasing power, transferring wealth from creditors to debtors in the process. Not that any politician would ever admit it. And if you don’t believe us, just ask this kid …
Credit: Last week, Mr. Kunstler pointed out latest real-life example of intentional inflation: Iran, where life “has gotten super-impossible. The government just issued banknotes in the denomination of ten million rials, worth seven US dollars (USD). Everybody there has plenty of money. Everyone is a millionaire, but they won’t be swanning around Fereshteh Street in top hats and monocles, shopping for Hermès, Louis Vuitton, and Rolex (because) nothing can function normally when the currency is absolutely worthless, including the regular distribution of food and fuel.” Not that there won’t be futile attempts at clever work-arounds…
Debit: Unfortunately, financial assets such as bonds and bank accounts, are merely claims denominated in USDs. As a result, for those who invest and save, rising inflation creates a challenge because if the value of the USD erodes, so does the purchasing power of those claims. The good news is that real assets like gold and silver behave differently because they’re tangible stores of value, rather than a promise to pay later – so their value doesn’t depend on the solvency of a debtor or the credibility of a central bank. Got gold?
By the Numbers
With March behind us, here is the year-to-date performance scorecard for select assets through the end of the first quarter of 2026:
-23% bitcoin
-8.1% Nasdaq 100
-5.1% S&P 500
-3.7% Dow Industrials
-0.1% Russell 2000
3.2% TNX (10-year US Treasury proxy)
5.2% SIL (silver miners proxy)
5.3% GDX (gold miners proxy)
5.6% silver
5.7% gold
Source: Yahoo!Finance
The Question of the Week
Last Week’s Poll Results
At what age do you plan on taking (or took) your first Social Security check?
- 62 or 63 31%
- 70 30%
- 66 or 67 23%
- 64 or 65 10%
- 68 or 69 6%
More than 3100 Len Penzo dot Com readers responded to last week’s question and it turns out that 2 in 5 of you plan on taking (or took) your first Social Security check no later than age 65. As for yours truly, I plan on waiting until I’m 70. Yes… I realize it may not be there by the time I draw that first check, but the good news my retirement planning was always based on never receiving any SS checks – so any payments will be retirement gravy for me.
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: The Dummy
A young boy entered a barber shop and the barber whispered to his customer, “This is the dumbest kid in the world. Watch; I’ll prove it.”
So the barber put a dollar bill in one hand and two quarters in the other. Then he called the boy over and asked, “Which one do you want, son?”
The boy immediately took the two quarters and left.
“What did I tell you?” asked the barber. “Happens every time! That kid never learns!”
Some time later, after the customer left, the barber noticed the same young boy coming out of the ice cream shop across the street. “Hey, son!” he shouted. “Hold on a second! I need to talk to you.”
The barber waited for traffic to clear and then met the boy in front of the ice cream shop. “May I ask you a question?”
“Sure, mister!” said the boy, licking his cone.
“Why do you always take the quarters instead of the dollar bill?”
The boy looked at the barber and took another lick off his ice cream cone. Then he replied, “Because the day I take that dollar, the game is over!”
(h/t: Sam I Am)
Squirrel Cam
Spring has sprung, which means Hooded orioles have returned from the Cabo San Lucas area to raise their young before returning to their winter homes in late August. This male oriole is among several that come back with their mates every year to nest in one of our nearby trees. (The other bird in this shot is a finch who, along with our oriole friend, is also enjoying the grape jelly, oranges and nectar that reside on our oriole feeder.)
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More Useless News
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Photo Credit: public domain
Question of the Week