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.
Well… another busy week is behind us. So with that in mind, let’s get this party started!
Those who try to get something for nothing generally wind up getting nothing for something.
– Napoleon Hill
Credits and Debits
Credit: Did you see this? This year, the average net worth of households led by someone aged 65 to 74 is $1.8 million. On the one hand, that means you could be a literal millionaire and still be considered just average. On the other, because the figure is an average and not the median, the value is skewed higher by the ridiculously wealthy. For example, in 2026 you’d need a net worth of $3 million to make the top 10% of individuals aged 65-69, $6.8 million to qualify for the top 5% and $22 million to belong in the top 1%. Meanwhile, there are still esteemed economically-literate politicians who are continually fighting to ensure that America’s prosperity is spread more equally amongst the citizenry…
h/t: @Paul_221144
Debit: Of course, no one ever got rich earning the minimum wage. After Seattle raised theirs to $20.76 two years ago, 450 restaurants in the Emerald City shut their doors within six months. As one restaurant owner put it, “If servers are making $20 an hour, then I gotta pay the cooks $35.” Ya think? Then consider that wages for other skilled professionals also increased to account for the newly-imposed higher entry-level salary – more evidence that interfering with free markets doesn’t work. Even so, Seattle’s clueless socialist policymakers have decided to – yet again – raise its minimum wage in 2027; this time to $22.14. So don’t be surprised if Seattle only has a handful of open restaurants by next summer. Meanwhile, in the housing market…
Scott Adams – Dilbert
Credit: Speaking of the housing market, we have another sign suggesting that it may be finally rolling over – which would be welcome news for first time buyers struggling with affordability. The latest housing market data shows that US home prices trailed inflation in 27 of the 50 largest metros on a year-over-year basis, including 13 where prices fell outright. Nationally, home prices rose just 1.4% while the “ official” inflation rate climbed 2.4% – although we know the inflation figure is actually far higher.
Credit: Meanwhile, over on Wall Street, the S&P 500 is up 13% year-to-date and hovering near all-time highs. However, its median component is up only 3%, while 440 of its 500 companies are down more than 20% from their 52-week highs. This prompted macro analyst Matthew Piepenberg to point out that, “Rather than a stock market, we have a concentrated minority of tech monopoly powers holding the rest of the broken pack together with techy duct tape and memes of ‘this time is different with AI.’” Does anybody else see a problem here? No? Okay… well then, how about here:
Debit: By the way, Mr. Piepenberg also notes that, “Since 2000, we’ve seen 13 market corrections. And in the first 12 of those 13 corrections, the US dollar (USD) always rose at least 8%. But on the 13th correction last April, when stocks lost 18%, the USD went down even as yields spiked. That’s not normal either. In this new abnormal, US Treasury bonds (USTs) sell off as stocks sell off, and the grossly debased USD, even in a rising yield setting, can’t strengthen. Although that’s not stopping others from looking for solutions by thinking outside the box.
(h/t: @KarolusWangus)
Debit: Needless to say, there is no safe-haven in the so-called “risk-free return” of a US IOU which, when measured against honest rather the Fed-measured inflation, is nothing more than “return-free-risk.” In short, we are in a different bond regime. The old rules, correlations and tricks no longer apply. Put another way: Treasury yields will almost certainly hold below the actual – not the “official” – inflation rate long into the foreseeable future, meaning any investment income will be more than washed away by the rising cost of living. Er… which is not to say that there’s anything wrong with a nice wash every now and then …
Debit: For those who remain blissfully unaware, fiscal dominance is officially here in the US. We know what you’re thinking: WTF is “fiscal dominance”? Well… fiscal dominance happens when government debt gets so huge that the central bank can no longer effectively fight inflation with higher interest rates because that would bankrupt the government. So the Fed’s only remaining option is to keep rates low and print currency instead. That’s great news for any government, as it inflate away their debt. Then again, it’s terrible news for anyone holding USDs, as it rapidly destroys the currency’s purchasing power. Yes, even faster than USD purchasing power has been whittled away since the Great Financial Crisis – let alone five years ago…
Source: The Kobeissi Letter
h/t: @Sempervigilant1
Credit: Then again, the critical issue isn’t simply the amount of debt; it’s the willingness of investors to continue financing that debt. According to macro analyst Don Durrett, declining demand for long-duration USTs and increasing intervention from fiscal and monetary system policymakers at the US Treasury and Fed, respectively, as important signals. The progression he describes involves intervention in the UST via yield curve control market followed by waning confidence. And “Once you get that consensus,” he warns, “it’s game over.” Indeed it is. Even so, normalcy bias prevents most people from imagining that scenario ever unfolding. Or this one, for that matter…
Gary Larson – The Far Side
Credit: Unfortunately for all of us, precious metals analyst Jesse Columbo notes that the transition from a gold-anchored USD to a debt-based fiat currency “has been nothing short of disastrous, resulting in tremendous inflation, plunging purchasing power, an explosion of global debt, punishing boom-and-bust cycles, soaring income and wealth inequality, growing resentment among those left behind by asset price inflation, and increasingly radical political movements that now threaten to usher in full-blown socialism in the not-too-distant future.” Very true. But other than that, it’s been great!
h/t: @fthegurus
Credit: Of course, with the UST market openly broken, and the Fed on the hook to soon crank its USD printers into overdrive, the only remaining monetary system safe haven is the yellow metal. In fact, it’s times like these why central banks hold gold as insurance against currency crises in the first place. And if it’s good enough for them, shouldn’t it be good enough for you too?
By the Numbers
A recent study found that 22% of US adults spent more on summer leisure travel than they originally expected. For Americans thinking about a fall getaway, where they can actually get their money’s worth, researchers revealed the top 10 US tourist attractions visitors say offer the best value for money, based upon the number of Trip Advisor reviews received describing those destinations as “great value,” “good value,” or “reasonably priced.” Can you guess which US attraction was crowned “Best Overall Value” based upon the highest number of favorable reviews?
109 The Art Institute of Chicago
121 Walt Disney World Resort
147 One World Observatory
161 Biltmore Estate
175 Graceland
269 Empire State Building
291 Universal Studios Hollywood
306 Dollywood
307 Kennedy Space Center
483 Alcatraz Island Tour
Source: Google AI
Last Week’s Poll Results
Do you have dental insurance?
- Yes 63%
- No 37%
More than 2800 Len Penzo dot Com readers responded to last week’s question and it turns out that more than 1 in 3 of you don’t carry dental insurance. As for yours truly, I don’t have it either. Mainly because my dental health is excellent (I’ve never had a cavity), and if something major does come up, I am fortunate enough to be able to afford treatment.
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: Watch Your Step
Three women died in a car accident and were immediately sent to the gates of heaven. When they got there, St. Peter said them, “Before you enter, you need to know that we only have one rule here: don’t step on the ducks!”
The three women readily agreed and entered heaven. Sure enough, there were ducks all over the place. In fact, it was almost impossible not to step on a duck; and although they tried their best to avoid them, within minutes of crossing the Pearly Gates, the first woman accidentally stepped on one.
Shortly thereafter, along came St. Peter with the ugliest man she ever saw. St. Peter then chained the two of them together, and said to the first woman, “You’ve broken the only rule here in heaven by stepping on a duck – so your punishment is to spend eternity chained to this ugly man!”
The next day, the second woman accidentally stepped on a duck too – and it wasn’t long before St. Peter appeared again. This time, with an even uglier man than the one he showed up with the day before. He then chained the two of them together, giving the second woman the same admonishment he gave to the first.
The third woman, having observed all this, and not wanting to be chained for all eternity to an even uglier man, vowed to herself that from this point forward she would be extremely careful where she stepped.
She was true to her word.
It turns out that by walking as slow as possible and constantly keeping an eye on the ground in front of her, she managed to go an entire year without stepping on a single duck.
And then one day St. Peter came up to her with the most handsome man she has ever laid eyes on; he was very tall, with long eyelashes, steel blue eyes and muscles on top of muscles. To her delight, St. Peter then chained them together without saying a word.
After St. Peter left, the woman gave a big smile to the handsome man beside her and said, “I wish I knew what I did to deserve being chained to you for all of eternity!”
The guy, who was visibly distraught, looked back at her and said, “Well… I don’t know about you, lady – but I stepped on a duck.”
(h/t: The 3rd Dimentia)
Squirrel Cam (After Dark)
On a rainy Southern California evening earlier this week, Poppy the ‘possum ventured into our backyard and under the patio roof looking for any stray nuts that might have been left by the squirrels…
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More Useless News
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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
Jessie shared a personal story this week on why he dislikes gift cards:
I just found a $50 gift card for Olive Garden that was given to me two years ago. It’s now worth $24.48.
Olive Garden, huh? Frankly, Jessie, I’m not sure why you’re complaining.
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Photo Credit: public domain