{"id":61180,"date":"2020-05-23T02:15:50","date_gmt":"2020-05-23T09:15:50","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=61180"},"modified":"2020-05-26T07:23:24","modified_gmt":"2020-05-26T14:23:24","slug":"black-coffee-23-may-2020","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id61180-black-coffee-23-may-2020.html","title":{"rendered":"Black Coffee: A Thief In the Night"},"content":{"rendered":"

\"\"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’re now ten weeks into the Greatest Depression and the markets are still broken beyond repair. Don’t expect that to change because the game is over — however we’re going to be forced to continue playing until the public finally realizes it. On to the commentary …<\/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

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.<\/em><\/p><\/blockquote>\n

— John Maynard Keynes<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? The financial research team at Bank of America expects the corona crisis to ultimately wipe out four years of GDP growth<\/a>, with BofA expecting real GDP at the end of 2021 to be where it was at the end of 2017. Think for a minute about the ramifications of that. No, really … I’ll wait.<\/p>\n

Debit:<\/strong><\/span> Now for more bad news: Calculations by Goldman Sachs suggest that if the Fed insists on avoiding negative rates, then Chairman Powell will have no choice but to increase the size of the latest quantitative easing (QE) injections, thereby unleashing yet another debt deluge of freshly printed currency into the financial system. As if a 27% annualized increase<\/a> in the money supply since February isn’t bad enough already.<\/p>\n

Debit:<\/strong><\/span> Of course, some people just love<\/strong><\/em> QE — like bond investors who benefit from the Fed’s bond buying. But there’s a dark side for them too. As Bloomberg noted this week, with “the threat of inflation amid a global fiscal splurge exceeding $8 trillion, bond investors face toxic risk<\/a> in the not-too-distant future.” The “threat”<\/strong><\/em> of inflation? Apparently, Bloomberg’s writers don’t shop for groceries. Or pay rent. Or have medical bills. Or kids in college. Or …<\/p>\n

Credit:<\/strong><\/span> Meanwhile, as macroeconomist Alasdair Macleod notes, “Today, through monetary debasement nearly everyone benefits from monetary redistribution. But this is not a costless exercise. Governments are no longer robbing Peter to pay Paul, they’re robbing Peter to pay Peter<\/a> as well.” On a somewhat related note …<\/p>\n