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…
Economists need to get their heads out of the textbooks and get a job in the real world. I wouldn’t even let one of them handle my grocery shopping.
– Pauline Hanson
Credits and Debits
Credit: Did you see this? Taylor Swift’s new husband, Travis Kelce, signed a four-year rookie deal worth $3.1 million after being drafted by the Kansas City Chiefs in 2013, which included a $703,304 signing bonus. For most folks, that’s life-changing money, but by the end of his first NFL season Kelce was dead broke; in fact, he still didn’t have a car, and he couldn’t cover his rent. Where did all the cash go? Kelce said he wasted all of it on frivilous stuff including a Rolex, a $10,000 (!) pair of sneakers, excessive leisure travel, and lots of “VIP bottle service” at tawny nightclubs. But he says, “It’s an experience that I appreciate now, because it helped me figure out exactly how to spend, how to save, and how to invest” later on.
The Far Side – Gary Larson
Credit: Meanwhile, with high living costs and labor market uncertainty making personal finance discussion more open than ever, Gen Z is breaking one of the most deeply rooted social taboos by openly discussing salaries. We wonder if that’s because more and more people are collecting a six-figure salary these days. On the other hand, we also wonder how many people earning $100,000 per year today understand that that has the equivalent purchasing power of just $53,600 back in 2000. Or, looking at it in reverse, $100,000 at the turn of this century had the purchasing power of roughly $188,000 today (but probably much more considering official inflation figures are understated). Either way, that goes a long way toward explaining this…
Debit: We wonder how many of those Gen Zers admit they were caught holding shares of IBM stock on July 14th when it fell more than 25%. Yes; in a single day. Ouch. The technology stock’s collapse was its worst drop in decades, after the company preannounced earnings that fell well below Wall Street’s expectations. Apparently, customers have shifted their spending away from software and mainframe products and toward AI servers and memory.
Credit: We see that the government’s shamelessly-gamed (yeah, we said it) inflation indicator known as the Consumer Price Index (CPI) had it’s biggest monthly decline in June after falling 0.4% month-over-month (MoM). No, really. That’s the biggest monthly decline since the pandemic (April 2020). That also managed to drag the year-over-year (YoY) CPI change down to 3.5%. Looking under the CPI’s hood, lower energy prices were the largest contributor to last month’s decline, more than offsetting price increases for everything else, including shelter and food. Now for the bad news: That was then. And this is now…
Credit: As for those grocery prices, they officially increased 0.2% on a monthly basis in June and ticked up 2.7% year over year. Food inflation was little changed from May’s 2.7% increase, but it was milder than April’s 2.9% rate, which just so happened to be the highest reading since August 2023. Meanwhile, food inflation at restaurants and bars fell to its lowest YoY reading since June 2020, at 3.4%.Then again, we guess that depends on who you talk to…
Credit: On a related note, a new study compared the cost of 15 store-brand essentials at Kroger, Walmart, Aldi and Albertsons, including milk, bread, eggs, chicken breast, spaghetti, canned beans and baking items. The winner? Kroger, with a total basket cost of $30. In fact, Kroger had the lowest prices on 10 of the 15 items analyzed, including dry spaghetti, sugar, a dozen large eggs, and canned diced tomatoes. As for the other competitors, Walmart came in second with a basket total of $30.95, followed by Aldi at $33.15 and Albertsons at $35.58. Meanwhile, back in the produce department…
Debit: In other news, the US National Debt will soon be crossing $40 trillion. To show you just how quickly the growth in red ink is accelerating, today’s US annual budget deficits now routinely exceed the entire National Debt back in 1984. And the pace is only going speed up from here. So it’s folly to believe that the current US dollar based (USD) monetary system will be continue to facilitate market functionality for much longer. If only there was a way to stop this ongoing destructive monetary larceny. Hmmmm. Perhaps something like this?
Credit: Of course, precious metals analyst Craig Hemke also points out that, “The investment world expresses value in fiat currency. Think: US dollars (USD) per share, or USDs per ounce. But in doing so, they miscalculate by using the USD as the measuring stick, as if the USD has a stable underlying value. However, that’s untrue. The USD – or any fiat currency, for that matter – is constantly being devalued by new issuance,” thereby diluting the purchasing power of all USDs that are already in circulation. By the way, that includes the USD-denominated assets in your long-term retirement retirement accounts. As for how fast that wealth will disappear, well… as the saying goes: Gradually at first – but then…
Credit: That being said, Mr. Hemke points out that, ultimately, “Gold just sits and collects dust as it pays no interest or dividends. But that’s the point! It’s value is not measurable because it is the measure. The gold price isn’t changing over time; its value remains stable. What changes is the amount of fiat currency needed to acquire it.” Indeed. Which is why, with the USD currency supply growing at a rapidly-accelerating pace, it’s a near-certainty that the price of the yellow metal in USDs will be at least an order of magnitude higher in the coming decades – despite the inevitable temporary pull backs that typically occur along the way.
Source: DiscoveryAlert.com
Credit: Unfortunately, as economist Peter Earle reminds us, as “prices rise, and the currency supply balloons… the number of zeroes layered onto economic life are quietly extended, (while) a USD buys far less than it once did. Even if nothing real changed – if no new factories were built, no technologies discovered, and no improvement in living standards achieved – the same assets would be priced higher over time as each USD lost purchasing power.” Alas, he says that steady upward drift of nominal magnitudes leads “the public to mistake financial scale for real, truly-productive achievement.” Uh huh. And that’s the boiling-frog analogy in a nutshell. And, sadly, most people won’t try to protect themselves until it is too late.
By the Numbers
With fast food prices increasing by an average of 60% over the past decade, a new study has analyzed average prices for burgers, pizza, and fried chicken sandwiches across all 50 states and compared them with each state’s median household income in order to assess where consumers spend the most and least relative to their income. Here are the five states where consumers spend the most – and least – relative to their paychecks.
50 New Jersey (0.27% of income)
49 Maryland (0.28%)
48 Massachusetts (0.29%)
47 Utah (0.29%)
46 Connecticut (0.30%)
5 West Virginia (0.43%)
4 New Mexico (0.44%)
3 Louisiana (0.44%)
2 Arkansas (0.45%)
1 Mississippi (0.48%)
Source: WalletHub
Last Week’s Poll Results
What’s the most you’ve paid for a single concert or sporting event ticket?
- $100 or less 52%
- $101 to $500 36%
- More than $1000 9%
- $501 to $1000 3%
More than 2600 Len Penzo dot Com readers responded to last week’s question and it turns out that slightly more than 1 in 9 of you have spent more than $500 for a single concert or sporting event ticket. As for my biggest single expenditure in that category, I spent slightly more than $2300 in 2014 for a ticket to Stanley Cup finals. That’s $3100 in today’s inflation-adjusted USDs.
Last week’s question was suggested by reader Frank. 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.
The Question of the Week
Useless News: An Appeal for Charity
A devastated-looking man knocked on the door of an extremely kind woman who was well known in town for her charity.
When she opened the door the man immediately implored, “Please, ma’am. I beg of you … Can you help this unfortunate family with a baby who lives down the block? The father lost his job two months ago, his wife is too ill to work, and all three of them are going to be turned out into the cold dark streets unless someone can pay their rent by tomorrow evening.”
The woman was immediately touched by the tragic story. After quickly composing herself she said, “Oh, dear! That’s the worst thing I’ve ever heard in my entire life! May I ask who you are?”
“But of course,” the man replied. “I’m their landlord.”
(h/t: Cowpoke)
Squirrel Cam
Say hello to Rosie. The new mom was enjoying a little snack on our backyard patio the other day….
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More Useless News
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After reading my aged — but still popular — post knocking the old Coke Rewards program, Joe Smithers left this comment:
I think this is the dumbest article I have ever read.
And you, Joe, are clearly mistaking me for somebody who cares.
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Photo Credit: public domain