{"id":54657,"date":"2019-05-11T02:15:19","date_gmt":"2019-05-11T09:15:19","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=54657"},"modified":"2023-06-02T17:35:22","modified_gmt":"2023-06-03T00:35:22","slug":"black-coffee-11-may-2019","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id54657-black-coffee-11-may-2019.html","title":{"rendered":"Black Coffee: Figures Don’t Lie"},"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 is enjoying their weekend! In the meantime, let’s get this show on the road so I can start mine …<\/p>\n

The English language has 112 words for deception, each with a different shade of meaning: collusion, fakery, malingering, self-deception, confabulation, prevarication, exaggeration, denial.<\/em><\/p><\/blockquote>\n

— Robin Marantz Henig<\/strong><\/p>\n

A farmer returning home in his wagon, after selling a load of corn, is a better indication of the economy than a nobleman riding in his chariot to the opera.<\/em><\/p><\/blockquote>\n

— ancient proverb<\/strong><\/p>\n

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

Debit:<\/strong><\/span> A new study by the Netherlands’ Central Bank found that, “Loose monetary conditions<\/a> strongly increase the top one percent’s income and vice versa. In fact, following an expansionary monetary policy shock, the share of national income held by the richest 1% increases by approximately 1 to 6 percentage points.” File that little factoid under ‘D’ for ‘duh!”<\/p>\n

Debit:<\/strong><\/span> In other news, it only took the S&P 500 just 215 days<\/a> to reach a new all-time high after its December mini-bear-market nadir — thanks to a desperate Fed agreeing to permanently backstop the market in order to maintain the wealth-effect illusion and avoid a financial crisis. Unfortunately, as the debt continues to pile up faster than the economy expands, that’s going to be an ongoing — and growing — challenge.<\/p>\n

Credit:<\/strong><\/span> As Jesse Colombo warns, “Although central banks have created an unusually long economic cycle by keeping monetary policies so loose for so long, there’s no escaping the eventual correction<\/a> of the tremendous excesses and malinvestments that have built up. Believing that the Fed has tamed the business cycle is extremely naive and will be disproven in the not-too-distant future.” I agree — but I’m also beginning to wonder.<\/p>\n

Credit:<\/strong><\/span> This week MN Gordon surveyed the US economic landscape<\/a> and assessed it thusly: “The unemployment rate is currently 3.6%. Real GDP increased 3.2% (last) quarter. The S&P 500 and the Nasdaq recently hit all-time highs. Given these numbers, shouldn’t the Fed be normalizing monetary policy?” Of course, they should. The $222 trillion question<\/a> is: Why aren’t they?<\/em><\/p>\n

Credit:<\/strong><\/span> According to financial analyst Jeffrey Snider, the Fed’s decision to stop raising rates is glaring proof that the “booming economy” is a sham: “The financial system isn’t fixed<\/a> and it never was. And without a monetary system in good working order you better believe the global economy is in danger. Again.” Speaking of shams, here’s one that never<\/strong><\/em> had a chance:<\/p>\n