{"id":58008,"date":"2019-11-30T02:15:31","date_gmt":"2019-11-30T10:15:31","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=58008"},"modified":"2024-03-06T12:11:32","modified_gmt":"2024-03-06T20:11:32","slug":"black-coffee-30-nov-2019","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id58008-black-coffee-30-nov-2019.html","title":{"rendered":"Black Coffee: Egg Nog and Seed Corn"},"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

I hope everybody is having a wonderful weekend. I know I’m enjoying mine! So let’s dig right in, shall we?<\/p>\n

The problem with fiat money is that it rewards the minority who can handle money, but fools the generation that has worked and saved money.<\/em><\/p><\/blockquote>\n

— Adam Smith<\/span><\/strong><\/p>\n

When you see that trading is not done by consent, but by compulsion; when you see that in order to produce you need to obtain permission from men who produce nothing; when you see money flowing into those who deal not in goods, but in favors; when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them but protects them against you; when you see corruption being rewarded and honesty becoming a self-sacrifice — then you know your society is doomed.<\/em><\/p><\/blockquote>\n

— from Francisco’s money speech; Ayn Rand’s Atlas Shrugged<\/em><\/strong><\/p>\n

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

Credit:<\/strong><\/span> This week Charles Hugh Smith lamented that America has been “hollowed-out<\/a>; an economy of ever-greater financial wealth piling up in the hands of the few, while tens of millions of wage-earners can’t afford what was available to everyone in previous eras: to buy a modest family home and afford to have children.” And before you roll your eyes and tell Chuck to have another egg nog — you should know he’s absolutely correct.<\/p>\n

Credit:<\/strong><\/span> You know, once upon a time, the income gains for America’s middle-class were so significant<\/a> that the wealth gap was actually narrowing<\/em><\/strong>. That’s because, for all but the final few years between 1930 and 1970, the bottom 90% of wage earners saw their incomes steadily increase<\/em><\/strong> and outpace inflation, while those for the top 1% gradually fell<\/strong><\/em>. It’s okay … I’ll wait while you go back and read that again.<\/p>\n

Debit:<\/strong><\/span> Meanwhile, Minneapolis Fed governor Neel Kashkari suggested this week that “monetary policy can play the redistributing role<\/a> once thought to be the preserve of elected officials.” Apparently, he’s unaware that the Fed’s monetary policies have been redistributing wealth from savers to borrowers for decades now. No thanks, Neel. You and your colleagues have done enough damage already.<\/p>\n

Debit:<\/strong><\/span> By the way, ever since the current wealth redistribution era from the middle class to the top 1% started 50 years ago, there has been an unprecedented increase<\/strong><\/em> in income growth for the wealthiest households, while inflation-adjusted income of the “Bottom 90%” has remained unchanged<\/strong><\/em>, at best — but you already knew that. As for what<\/strong><\/em> precipitated the decline of America’s middle class, well … it was this<\/a>:<\/p>\n