{"id":51535,"date":"2018-11-03T04:15:47","date_gmt":"2018-11-03T11:15:47","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=51535"},"modified":"2025-02-15T09:31:18","modified_gmt":"2025-02-15T17:31:18","slug":"black-coffee-3-nov-2018","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id51535-black-coffee-3-nov-2018.html","title":{"rendered":"Black Coffee: Is Inflation Coming Like a Thief In the Night?"},"content":{"rendered":"

\"\"<\/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

We’ve got a lot to cover this week, so let’s get right to it …<\/p>\n

“A man in debt is so far a slave.”<\/em><\/p><\/blockquote>\n

— Ralph Waldo Emerson<\/strong><\/p>\n

“There are only three ways to meet the unpaid bills of a nation. The first is taxation. The second is repudiation. The third is inflation.”<\/em><\/p><\/blockquote>\n

— Herbert Hoover<\/strong><\/p>\n

“The main purpose of the stock market is to make fools of as many men as possible.”<\/em><\/p><\/blockquote>\n

— Bernard Baruch<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? Sweden’s Riksbank has become the first central bank in the 21st century to take concrete measures to ensure that cash does not disappear<\/a> as a means of payment from the financial system. Yes, the same Riksbank that had been vigorously leading the charge for a cashless society during the past decade. So what changed?<\/p>\n

Debit:<\/strong><\/span> This can’t be good: By the end of this calendar year, the US will have borrowed more than $1.3 trillion<\/a>. Obviously, there’s no shortage of green ink at the Treasury. Come to think of it, there’s always plenty of red ink there too.<\/p>\n

Credit:<\/strong><\/span> At some point, America’s debt party will end with an awful reckoning. This week, Ron Paul said that, the only way Congress can avoid a crisis<\/a> is to pass bills to audit the Fed, allow alternative currencies, and “exempt all transactions in precious metals … from capital gains and other taxes.” That’s a good start — but eventually we’ll need to end the Fed and institute a monetary system backed by gold and silver too.<\/p>\n

Credit:<\/strong><\/span> Then again, on a yearly basis, US wages and salaries jumped 3.1%<\/a>; that’s the biggest increase in 10 years. Hooray! The bad news is, those gains are nominal; in other words, wage gains before<\/em> inflation. Real average US wages have the same purchasing power as they did four decades ago. The average American wage of $4.03 in 1973 had the same purchasing power<\/a> that $23.68 does today. Imagine that.<\/p>\n

Debit:<\/strong><\/span> Speaking of inflation, a new Wall Street Journal report notes that a broad array of US consumer staple and industry-leading companies are either already in the process of raising prices<\/a>, or have set concrete plans to do so in the very near future. If true, American pocketbooks could be in for quite a shock in the first quarter of next year. Just how shocking? Well … let’s ask Mr. Wizard:<\/p>\n

Credit:<\/strong><\/span> By the way, with rampant price inflation infecting life’s most basic necessities (see: food, housing and energy), it’s hard to believe the world needs even more<\/em> dollars. Well … think again. Macroeconomist Jim Rickards says, “A dollar shortage seems implausible (after) the Fed printed $4.4 trillion. But while the Fed was printing, the world borrowed $70 trillion<\/a>, so the dollar shortage is real.” Unbelievable.<\/p>\n

Debit:<\/strong><\/span> In other news, the so-called FANG stocks were down steeply<\/a> at the start of the week: Facebook was off 34%; Amazon was down 24%; Netflix retreated 33%; and Google was 18% lower. And if you think the FANG stocks have been scraping the bottom of the barrel lately, you should check this out:<\/p>\n