{"id":55139,"date":"2019-06-08T02:15:21","date_gmt":"2019-06-08T09:15:21","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=55139"},"modified":"2019-06-11T05:03:15","modified_gmt":"2019-06-11T12:03:15","slug":"black-coffee-8-june-2019","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id55139-black-coffee-8-june-2019.html","title":{"rendered":"Black Coffee: Central Bank Error NOT In Your Favor"},"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 Bank never “goes broke.” If the Bank runs out of money, the Banker may issue as much more as may be necessary by merely writing on any ordinary paper.<\/em><\/p><\/blockquote>\n

From the Rules of Monopoly<\/em><\/strong><\/p>\n

The last duty of a central banker is to tell the public the truth.<\/em><\/p><\/blockquote>\n

Alan Blinder, former Fed Vice Chairman <\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Nearly 1 in 4 Americans say they’re constantly worried about not having enough money<\/a> to cover their household expenses — and roughly the same number said they’re only just making ends meet. I wonder how many of those people are having sleepless nights because they’re actually living above their means.<\/p>\n

Debit:<\/strong><\/span> In other news, the Global Manufacturing Purchasing Managers Index (PMI), which covers consumer-, investment- and intermediate-goods, contracted for the first time in seven years<\/a>. Dave Kranzler notes that “it has been falling almost nonstop<\/a> since mid-2017″ — the longest decline in its 20-year history. Yet, with the press constantly talking about a “booming economy,” that probably comes as a surprise to most people.<\/p>\n

Credit:<\/strong><\/span> You can bet bond guru, Jeffrey Gundlach, isn’t surprised. He recently reminded us that nominal GDP growth over the past five years would have been “very” negative without US public debt. He also claims that analysts and financial journalists don’t seem to understand that although GDP growth looks<\/em><\/strong> good, in reality it’s “based exclusively on debt<\/a>.” Imagine that.<\/p>\n

Debit:<\/strong><\/span> For his part, this week Fed Chair Jerome Powell suggested more rate cuts are on the horizon. Powell also said that interest rates so close to zero “has become the preeminent monetary policy challenge<\/a> of our time.” Ya think<\/strong><\/em>, Jay? He also said that during the next crisis, even more “‘unconventional’ … tools are likely to be needed.” Yes, because quantitative easing<\/a>and negative real interest rates worked so well the last time.<\/p>\n

Credit:<\/strong><\/span> Then again, as Alexander Trgiaux points out, Powell’s words were, “a remarkable moment of candor<\/a> for any Fed Chair. Now, with his incredible admission that the Fed is trapped (by) its own past policy mistakes, we’re staring down the barrel of a new reality with few options.” Of course, Wall St. loves it; at Friday’s closing bell, the Dow had its biggest weekly point gain<\/a> ever<\/strong><\/em>. As they say, when the cat’s away …<\/p>\n