{"id":63459,"date":"2020-10-24T02:15:05","date_gmt":"2020-10-24T09:15:05","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=63459"},"modified":"2025-05-10T10:58:25","modified_gmt":"2025-05-10T17:58:25","slug":"black-coffee-24-oct-2020","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id63459-black-coffee-24-oct-2020.html","title":{"rendered":"Black Coffee: Between a Rock and a Hard Place"},"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

Let’s get right to this week’s financial commentary …<\/p>\n

In reality there is no such thing as an inflation of prices, relatively to gold. But there is such a thing as a depreciated paper currency.<\/em><\/p><\/blockquote>\n

— Lysander Spooner<\/strong><\/p>\n

Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.<\/em><\/p><\/blockquote>\n

— Sam Ewing<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? A new Harvard study places the costs of the COVID-19 pandemic at more than $16 trillion — to be specific, that’s the estimated cumulative financial costs<\/a> of the COVID-19 pandemic related to lost output and health reduction. For those counting at home, that’s 90% of the annual US GDP — and more than twice the monetary outlay for all of the wars the US has fought this century.<\/p>\n

Credit:<\/strong><\/span> Speaking of US GDP, macroeconomist Alasdair Macleod points out that, “Measured by the CPI, by end-2019 the economy had grown by nearly 22% over nine years ‘in real terms.’ But because the CPI is a heavily-suppressed measure of price inflation, the truth is different. The Chapwood index<\/a> tells us that GDP has been more than halved from $15.2 trillion to $6.8 trillion, measured in 2010 dollars.” Funny how that works …<\/p>\n

\"\"<\/p>\n

Debit:<\/strong><\/span> How do we know this? Well … it’s no secret that the US suppresses the CPI in order to disguise the rapidly-falling value of the dollar — and it’s quite effective too. For example, the cumulative price effect of the CPI since 2010 is a 19% increase; now compare that to the Chapwood index inflation reading of 159% over the same period. Of course, this helps explains the recent announcement that Social Security benefits will rise just 1.3% in 2021<\/a>.<\/p>\n

Debit:<\/strong><\/span> And for those of you wanting more proof that the Chapwood figures are closer to reality, Macleod points out that the sharp increase in the USD M3<\/a> money supply since 2010 has “diluted the dollar by increasing 109% over the period.” See for yourself, folks — the red line, representing CPI, barely increases despite the sharply rising green line, representing the broad money supply:<\/p>\n

\"\"<\/p>\n

Credit:<\/strong><\/span> In fact, inflation has devalued the US dollar so badly since its anchor to gold was broken<\/a> in 1971 that the majority of Americans today have absolutely no idea that there was actually a time when the loose change in our pockets was usually enough to buy some pretty good stuff — especially if you were a kid …<\/p>\n