{"id":43279,"date":"2017-06-10T05:15:24","date_gmt":"2017-06-10T12:15:24","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=43279"},"modified":"2020-05-17T14:18:29","modified_gmt":"2020-05-17T21:18:29","slug":"black-coffee-10-june-2017","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id43279-black-coffee-10-june-2017.html","title":{"rendered":"Black Coffee: Close Enough for Government Work"},"content":{"rendered":"

\"black<\/a>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

Let’s get right to it …<\/p>\n

“It’s difficult to get a man to understand something when his salary depends upon his not understanding it.”<\/em><\/p><\/blockquote>\n

— Upton Sinclair<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Last week, Amazon shares surpassed the $1000 per share milestone. This week it was Alphabet’s turn<\/a> to surpass the $1000 barrier. Alphabet, of course, is Google’s parent company.<\/p>\n

Credit:<\/strong><\/span> If you think that’s impressive, Jim Rickards noted<\/a> this week that if the money supply of the US, China, and European Union was fully-backed by their respective central banks’ gold holdings, then the yellow metal should actually be selling for $67,000 per ounce — not the current market price of $1267. That’s right: 67 large.<\/p>\n

Credit:<\/strong><\/span> The current gold-silver ratio is approximately 73, but silver bugs will point out that if the ratio returns to its historic average of 15<\/a>, Rickards’ gold figure would imply the true price of silver is $4467 per ounce — not today’s $17.20. Will it ever get there? Who knows? But that doesn’t change the fact that physical silver — and gold — are severely undervalued.<\/p>\n

Debit:<\/strong><\/span> Then again, nobody cares about gold and silver these days, especially with bitcoin up nearly 200% in 2017. In fact, the cryptocurrency is now pushing $3000 — and it could be headed for $1,000,000<\/a>! No, really. At least that’s what MSNBC’s Jim Cramer said this week — which means the bubble phase can’t be too far behind. (Psst. If you hear the baristas at Starbucks touting bitcoin, take the money and run.)<\/p>\n

Credit:<\/strong><\/span> These are heady days, to be sure. After all, American households’ cumulative net worth is now at a record $95 trillion<\/a>. You can probably thank Amazon, Alphabet and bitcoin for at least part of that.<\/p>\n

Debit:<\/strong><\/span> The bad news is, most of that increase in net worth was concentrated in the top 10%<\/a> of all households. Average wealth was about $4 million for families in the top 10% of the wealth distribution, $316,000 for families in the 51st to 90th percentiles, and $36,000 for families in the 26th to 50th percentiles. As for households in the bottom quartile, well … they were, on average, $13,000 in debt. Ouch.<\/p>\n

Debit:<\/strong><\/span> Hey … it’s tough out there, which is why many older folks are working jobs that used to be done primarily by teenagers. As a result, the number of teens working summer jobs<\/a> — or even looking for one — is plummeting. For example, last July, 43% of teens between 16 and 19 were either employed or looking for a job. Compare that to 1988, when the July labor force participation rate for teens was nearly 70%.<\/p>\n

Credit:<\/strong><\/span> Yes, many teenagers are allergic to work; but many adults are apparently so allergic to earning a living that they’d rather “starve,” as evidenced by 13 Alabama counties that saw an 85% drop in food stamp participation<\/a> after work requirements were enacted this year. Crazy, I know — but Maine recently saw similar results<\/a> after passing a nearly-identical law.<\/p>\n

Debit:<\/strong><\/span> Speaking of crazy, last month I pointed out the folly of the April payroll report considering that the loony “birth\/death model” inflated the final jobs number by 255,000 positions<\/a>. In fact, without that dubious manipulation, the economy actually lost<\/em> 44,000 positions that month.<\/p>\n

Debit:<\/strong><\/span> Believe it or not, it gets worse: The statistical deception in the employment figures is so bad that 93% of all jobs<\/a> created since 2008 were added through the birth\/death model. Yes, in other words, the government reports are a sham — which goes a long way toward explaining why the labor participation rate is at a four-decade low, despite an “official” unemployment rate of 4.4%.<\/p>\n

Credit:<\/strong><\/span> Financial analyst Dave Kranzler isn’t surprised<\/a>. He notes that, “If you sift through the Bureau of Labor Statistics’ website section that describes the birth\/death model methodology — something which Wall St. analysts and financial reporters never bother to do — the BLS admits the high potential for error.” Ignorance is bliss, Dave — and it keeps food on the table. Well … at least it does for some people.<\/p>\n

The Question of the Week<\/strong><\/p>\n

[poll id=”167″]<\/p>\n

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

How many checking, saving, and other bank accounts do you have?<\/p>\n