{"id":63908,"date":"2020-11-28T02:15:43","date_gmt":"2020-11-28T10:15:43","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=63908"},"modified":"2023-06-23T10:54:20","modified_gmt":"2023-06-23T17:54:20","slug":"black-coffee-28-nov-2020","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id63908-black-coffee-28-nov-2020.html","title":{"rendered":"Black Coffee: Gradually, Then Suddenly"},"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

I’m really excited that the Christmas season is finally here. The good Lord knows we could all use some holiday cheer. And with that, let’s get right to this week’s financial commentary …<\/p>\n

Hyperinflation is a hellish carnival, where all the old standards of value, right and wrong, and good and evil are swept away.<\/em><\/p><\/blockquote>\n

— Bill Bonner<\/strong><\/p>\n

Then the real witches’ sabbath of inflation started. A pair of shoe laces cost more than a fashionable shoe store with 2000 pairs of shoes had cost before; to repair a broken window cost more than the whole house had formerly cost; a book, more than the printer’s shop with 100 presses.<\/em><\/p><\/blockquote>\n

— Steven Zweig<\/strong><\/p>\n

How did you go bankrupt? Two ways. Gradually, then suddenly.<\/em><\/p><\/blockquote>\n

— Ernest Hemingway, The Sun Also Rises<\/em><\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? On Tuesday the Dow topped 30,000<\/a> for the first time ever. Hooray!<\/p>\n

Debit:<\/strong><\/span> On the other hand, I’m sure the nearly six-million Americans who say they expect to face eviction<\/a> or foreclosure by the end of this year aren’t impressed by the stock market’s latest all-time high. For those of you counting at home, that’s one-third of the 17.8 million adults in households who are currently behind on rent or mortgage payments.<\/p>\n

\"\"<\/p>\n

Debit:<\/strong><\/span> Meanwhile, a new study has found that taxpayers will be footing the bill for $435 billion<\/a> of the $1.4 trillion in government-backed student loans this year — even if no additional loans are issued going forward. Unbelievable. I’m sure that all of the responsible people out there who already dutifully paid their student loans in full feel like complete suckers right about now — and I don’t blame you.<\/p>\n

\"\"<\/p>\n

Credit:<\/strong><\/span> As Wolf Richter points out, “The expected loss of $435 billion is far larger than the rosy estimates<\/a> released previously, including the Congressional Budget Office’s (CBO) estimate in May 2019 of a loss of $31 billion, including administrative costs.” That’s not surprising. That’s the same CBO that is claiming the US deficits will average “just” $1.3 trillion per year through 2030. No, really<\/a>.<\/p>\n

Debit:<\/strong><\/span> On a related note, eight central banks are expected to add liquidity equivalent to, on average, 0.66% of annual GDP during each and every month in 2021. According to Morgan Stanley’s chief strategist, Matthew Hornbach, “We’ve never seen such a rapid global liquidity injection.” Ya think? I guess if there’s any good news here, it’s that the Fed is working hard to ensure the US dollar remains on pace to end the latest toilet paper shortage:<\/p>\n

\n

21% of all US Dollars were printed in 2020. https:\/\/t.co\/wFcRxPxN9G<\/a><\/p>\n

Sven Henrich (@NorthmanTrader) November 24, 2020<\/a><\/p><\/blockquote>\n