{"id":51830,"date":"2018-11-24T00:05:32","date_gmt":"2018-11-24T08:05:32","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=51830"},"modified":"2025-03-28T17:13:49","modified_gmt":"2025-03-29T00:13:49","slug":"black-coffee-24-nov-2018","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id51830-black-coffee-24-nov-2018.html","title":{"rendered":"Black Coffee: Figuring Out the Difference Between Crazy and Insane"},"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

I hope everyone had a terrific Thanksgiving. By the way, if you enjoy what you’re reading, please share this with your friends and family. Thank you!<\/p>\n

And with that, another glorious week comes to an end, so off we go …<\/p>\n

“Affirmation without discipline is the beginning of delusion.”<\/em><\/p><\/blockquote>\n

— Jim Rohn<\/strong><\/p>\n

“Money has often been a cause of the delusion of the multitudes. Sober nations have all at once become desperate gamblers, and risked their existence upon the turn of a piece of paper.”<\/em><\/p><\/blockquote>\n

— Charles Mackay<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? Investment fund manager, John Hussman, recently lamented that there are three popular delusions<\/a> currently being embraced by financial bulls everywhere: the delusion of paper wealth, the delusion of a booming economy, and the delusion that is bitcoin. He’s right; let’s take a closer look at all three, starting with bitcoin …<\/p>\n

Debit:<\/strong><\/span> On Tuesday, bitcoin briefly dropped to $4000 per coin<\/a>, which marks an approximate 80% pullback from its all-time high near $20,000 last December — and nearly 30% in the last week! I guess bitcoin holders can take solace in the fact that 80% drops have transpired twice before, in 2011 and 2014 — but its market cap was far less both times, which suggests another such recovery will be much tougher this time.<\/p>\n

Credit:<\/strong><\/span> For some reason, a lot of bitcoin holders are surprised<\/a> at its continuing plunge; they shouldn’t be. Despite proponents’ claims, bitcoin is backed by nothing tangible. It’s ephemeral too — unlike physical gold and silver, which can be valued by weight. Cryptocurrencies are also difficult — if not impossible — to use if the grid goes down. Cryptos aren’t scarce either; they’re created out of thin air almost daily.<\/p>\n

Credit:<\/strong><\/span> Today, cryptomania is clearly in its death throes. Remember when Long Island Iced Tea Corp. shares rose 289% last year after the company rebranded itself Long Blockchain Corp<\/a>? Well, after topping out at $6.01 in December during the height of the tulip<\/del><\/span> crypto hysteria, the stock has been in a steady decline<\/a>. So much so that shares of Long Blockchain Corp on Friday were selling for as low as … wait for it … 12 cents. Ouch.<\/p>\n

Debit:<\/strong><\/span> Another delusion that’s still going strong is the so-called booming economy. Yes, government figures show unemployment is at multi-decade lows — never mind that the rate keeps dropping because more people have given up on finding work<\/a> and therefore are no longer counted as either working or unemployed. But if everything is so rosy, why did American household debt hit a record high<\/a> last quarter?<\/p>\n

Debit:<\/strong><\/span> The truth is, the current economic “boom” is a debt-driven mirage, as evidenced by the 28% of all holiday shoppers who are entering this Christmas season still paying down debt<\/a> they accrued during last<\/em><\/strong> year’s festivities. But, hey … if you’re looking for a so-called “gift” that keeps on giving, debt is the easy answer to everyone’s economic troubles out there — including the world’s central banks. Go figure. No, really:<\/p>\n