{"id":50372,"date":"2018-08-11T04:15:33","date_gmt":"2018-08-11T11:15:33","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=50372"},"modified":"2023-05-12T10:31:40","modified_gmt":"2023-05-12T17:31:40","slug":"black-coffee-11-august-2018","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id50372-black-coffee-11-august-2018.html","title":{"rendered":"Black Coffee: Bitcoin, Bolivars, Bucks, Banks and Other Bogus Business"},"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 this week …<\/p>\n

“Modern banking manufactures currency out of nothing. The process is perhaps the most astounding sleight of hand that was ever invented. If you want to be slaves of the bankers, and pay the cost of your own slavery, then let the banks create currency.”<\/em><\/p><\/blockquote>\n

— Lord Josiah Stemp<\/strong><\/p>\n

“Before bitcoin, I was just waiting around for the singularity.”<\/em><\/p><\/blockquote>\n

— Roger Ver<\/strong><\/p>\n

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

Credit:<\/strong><\/span> This week the CEO of JPMorgan, Jamie Dimon, turned more than a few heads when he said that nobody should be surprised if the 10-year Treasury hits 5%<\/a>. Wow. If he’s correct, you can expect significantly higher mortgage rates and auto loans. You can also bet those ubiquitous home flippers won’t be happy.<\/p>\n

Debit:<\/strong><\/span> Higher interest rates would be welcomed by retirees who, after a decade of paltry Fed-engineered returns, are looking to earn some income from their dwindling nest eggs. Then again, it may be too little too late, as the New York Times just published a piece that discussed the fact that the bankruptcy rate among retirees<\/a> is three times higher than it was in 1991.<\/p>\n

Debit:<\/strong><\/span> Speaking of retirement nest eggs, this week a former Fed economist suggested that Japan’s Government Pension Investment Fund — the world’s largest — should step out of its comfort zone<\/a> and buy more high-yield bonds and alternative assets such as real estate. Unbelievable. In case you’re wondering, “high-yield bonds” are more accurately known as “junk” bonds. There’s a reason for that.<\/p>\n

Debit:<\/strong><\/span> On a related note, last quarter the Swiss National Bank (SNB) bought 4.9 million shares of AT&T, 673,000 shares of Microsoft, 305,000 shares of Apple, 272,000 shares of Facebook, 46,000 shares of Amazon, and 423,000 shares of Exxon-Mobile. As a result, its portfolio now generates $1 billion worth of dividends<\/a> — or as @SheepleAnalytics notes, “They print money and we ship them our profits.”<\/p>\n

Debit:<\/strong><\/span> For those keeping track at home, with the latest purchases, the Swiss central bank boosted its total holdings of US stocks to almost $88 billion. Those equities join more than $20 billion of European stocks<\/a> in the SNB portfolio — and all<\/em> of it was bought with “money” created out of thin air. I know … I should have been a banker. You should have been one too.<\/p>\n

Credit:<\/strong><\/span> I guess somebody<\/em> has to buy these artificially-inflated stocks, since the general public has clearly been losing interest in the market since the Great Financial Crisis, as Steve Henrich neatly sums up here:<\/p>\n

\n

The dying US stock market.
\nAugust average daily trading volumes for $SPY<\/a>
\n2010: 242M
\n2011: 452M
\n2012: 118M
\n2013: 114M
\n2014: 94M
\n2015: 188M
\n2016: 68M
\n2017: 68M
\n2018 so far: 48M<\/p>\n

Sven Henrich (@NorthmanTrader) August 9, 2018<\/a><\/p><\/blockquote>\n