{"id":33634,"date":"2015-09-19T03:15:36","date_gmt":"2015-09-19T10:15:36","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=33634"},"modified":"2020-08-10T08:14:56","modified_gmt":"2020-08-10T15:14:56","slug":"black-coffee-19-september-2015","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id33634-black-coffee-19-september-2015.html","title":{"rendered":"Black Coffee: The Fed’s Credibility Gap Is Wider than the Grand Canyon"},"content":{"rendered":"

\"\"It’s time to sit back, relax and enjoy a little joe<\/em> …<\/p>\n

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.<\/p>\n

Apparently, I’m not the only one who thinks Derrick Peltz was robbed when Claudia Sandoval was crowned the winner<\/a> of MasterChef Season 6. Wow. What were Gordon Ramsay, Graham Elliott and Christina Tosi thinking?<\/p>\n

Oh well, onward and upward …<\/p>\n

Credits and Debits<\/strong><\/p>\n

Credit:<\/strong><\/span> If you listen to the usual suspects, the US has been enjoying an economic recovery<\/a> for the past six years — even though they’re now admitting it hasn’t lifted the living the standards of low- and middle-income Americans. That doesn’t sound like a “recovery” to me, but okay …<\/p>\n

Debit:<\/strong><\/span> After all, if we’re in the midst of a recovery, then why on Earth did the Fed decide this week to maintain its zero-interest rate crutch<\/a>, which has been propping up the US economy since 2008? If they won’t raise rates now, then when? Bueller? Anyone?<\/a><\/p>\n

Credit:<\/strong><\/span> Of course, the Fed has been intimating it would raise rates after the economy recovered for years. Now its credibility is shot<\/a>. Assuming it wasn’t already.<\/p>\n

Debit:<\/strong><\/span> By standing pat — yet again — the Fed is tacitly admitting it’s all a charade<\/a>. After almost seven years, they’re still afraid a minuscule 25 basis-point rate hike will collapse the economy. (Psst. It probably would.)<\/p>\n

Debit:<\/strong><\/span> Clearly, something<\/em> isn’t right. It’s hard to see how anyone can claim the economy has recovered when incomes are 6.5% lower<\/a> than when the recession began. Aside from the usual suspects, that is.<\/p>\n

Credit:<\/strong><\/span> As for the housing market, there are a growing number of signs that it has finally reached a top. The latest indicator is plunging sales<\/a> for mansions listed at $100 million or more. Not that the millionaires who buy them usually have to worry about that.<\/p>\n

Debit:<\/strong><\/span> Then again, with some people spending $75 million for a birthday cake these days, I can see why they’d be less inclined to drop $100 million on pricey real estate. No, really<\/a>.<\/p>\n

Debit:<\/strong><\/span> Let’s face it folks: It’s pretty hard to argue with a straight face that the US economy is back — well … unless you’re referring to the fact that the median household income is at the same level it was back in 1989<\/a>.<\/p>\n

Debit:<\/strong><\/span> And while household incomes continue falling for most Americans, the federal government’s income continues to set records: almost $2.9 trillion<\/a> over the past 11 months alone. Even so, the government has still managed to run up a $530 billion deficit over the same period. I know.<\/p>\n

Debit:<\/strong><\/span> Speaking of government deficits, Illinois is so deep in debt now — $163 billion and climbing — that they’re stuck issuing IOUs<\/a> to state lottery winners. You can blame those ridiculous government pensions<\/a> and retiree healthcare expenses for the bulk of the red ink. As usual.<\/p>\n

Debit:<\/strong><\/span> The irony is, eventually the state of Illinois will make good on its paper promises by paying their lottery winners with more IOUs<\/a> — otherwise known as US dollars. The only question is: Will the buck still buy something<\/a> when they finally collect?<\/p>\n

Debit:<\/strong><\/span> By the way, on Friday gold closed at $1138.93 per ounce. Meanwhile, the Comex<\/a> now has 255 paper claims<\/a> for every ounce of physical gold in their vaults that’s available for sale.<\/p>\n

Credit:<\/strong><\/span> Yes, that’s the biggest disparity between paper and physical gold ever. With that in mind, it’s only natural to wonder what physical gold’s true purchasing power<\/a> really is. We may find out soon. Or not.<\/p>\n

Debit:<\/strong><\/span> The bottom line is that the precious metals market is now a pathetic charade<\/a> of breathtaking magnitude. One thing is certain: When this criminal economic sleight of hand finally stops working, it will change America as we currently know it — and a lot of people won’t be happy.<\/p>\n

Credit:<\/strong><\/span> And finally … A California man is taking Experian to court, claiming that they’ve sold reports marking him as dead<\/a> for more than a year, thereby making it impossible for him to obtain credit. Hmmm. Maybe Experian should consider running Chicago’s elections<\/a>. Hey … It’s just a thought.<\/p>\n

By the Numbers<\/strong><\/p>\n

Here’s a closer look at consumer credit card debt in the US:<\/p>\n

3<\/strong><\/span><\/span> Rank of credit card debt among all other household indebtedness sources. (Mortgage and student loan rank 1 and 2, respectively.)<\/p>\n

$7,327<\/strong><\/span><\/span> Credit card debt owed by the average household (among all households).<\/p>\n

$15,706<\/strong><\/span><\/span> Average credit card debt among households that carry a balance from month to month.<\/p>\n

43.2<\/strong><\/span><\/span> Percentage of households with a credit card balance in 2010.<\/p>\n

46.7<\/strong><\/span><\/span> Percentage of households with a credit card balance in 2012.<\/p>\n

$890,900,000,000<\/strong><\/span><\/span> Credit card debt owed by Americans as of August 15, 2015.<\/p>\n

Source: Nerd Wallet<\/em><\/p>\n

Last Week’s Poll Result<\/strong><\/p>\n

What is your primary credit card?<\/p>\n