{"id":69190,"date":"2021-10-16T02:15:29","date_gmt":"2021-10-16T09:15:29","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=69190"},"modified":"2023-05-12T10:49:55","modified_gmt":"2023-05-12T17:49:55","slug":"black-coffee-16-oct-2021","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id69190-black-coffee-16-oct-2021.html","title":{"rendered":"Black Coffee: More Market Mayhem"},"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 hope everybody had a terrific week. With the hardest part of it over, let’s get right to this week’s commentary …<\/p>\n

Inflation is when you pay $15 for the $10 haircut you used to get for $5 when you had hair.<\/em><\/p><\/blockquote>\n

— Sam Ewing<\/strong><\/p>\n

Castles in the sand slip into the sea eventually.<\/em><\/p><\/blockquote>\n

— Jimi Hendrix<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? The national average price for a gallon of gas increased eight cents on the week to $3.27 — that’s 10 cents more than a month ago, $1.09 more than a year ago, and the highest price since October 2014<\/a>. It makes me nostalgic for the days when the cost of my July 4th BBQ was 16 cents lower than the year before. Er … or so I was I told.<\/p>\n

\"\"<\/a> \"\"<\/a><\/p>\n

Debit:<\/strong><\/span> Oh, I know what you’re thinking: But, Len, it’s not just gasoline.<\/em> Very true; this week saw a new record in oats futures<\/a> too. The sudden spike in prices has yet to ripple through supply chains to affect consumers — although that will be coming. What this means for consumers is that dwindling supplies and record-high prices will soon affect foods like cereals, oatmeal, and granola bars, all popular breakfast items. As for the cause of all this economic chaos, that’s still up for debate. At least for the elite — and their water carriers:<\/p>\n

\"\"<\/a><\/p>\n

Debit:<\/strong><\/span> Of course, when it comes to economics in the age of fiat currency, there’s always<\/strong><\/em> a punchline — and here’s the one regarding soaring oat prices: At more than $6 per bushel of oats<\/a> — that’s still only 20 cents per pound. Meanwhile, a typical one-pound box of your typical oat cereal is currently selling for about $5, which begs the question: Where is the other<\/strong><\/em> $4.80 going? We’ll leave that as an exercise for the student.<\/p>\n

Debit:<\/strong><\/span> By the way, another popular breakfast food facing higher prices is sugary donuts, according to Krispy Kreme, who recently warned ingredients, such as flour, butter, milk, oil, and sugar, are forcing the company<\/a> to raise prices. Now, if only the economists at the Fed — who still think inflation is relatively tame — would tell us where they do their<\/strong><\/em> grocery shopping, because they obviously don’t shop here<\/strong><\/em> …<\/p>\n

\"\"<\/a><\/p>\n

Debit:<\/strong><\/span> But wait … there’s more good news for consumers. In case you missed it — or haven’t gone grocery shopping in the last few months — according to the United Nation’s food index, global food prices rose to a new decade high<\/a> in September. Yes; just in time for Thanksgiving and the holiday season. The good news is … if you’re looking for investments that double as a reliable long term store of value, canned food is offering double-digit returns right now.<\/p>\n

Credit:<\/strong><\/span> Then again, higher prices are what happens when interest rates are artificially suppressed to circumvent the business cycle — and then a 10-year QE program is employed to hold them there permanently. Indeed, as the inimitable MN Gordon notes, “The purpose of these money printing programs is to bail out big banks and big businesses, and to keep financial markets inflated and Washington supplied with cheap credit. By all honest accounts, US financial markets have been rigged<\/a> for at least three decades. And there’s no turning back.” Sadly, “honest accounts” are in short supply these days. Like everything else.<\/p>\n

\"\"<\/a><\/p>\n

Credit:<\/strong><\/span> On a related note, a recent white paper from Daniel Oliver at Myrmikan Research lays out the Fed’s intractable policy problem<\/a>. He says that, after a decade of gross mismanagement, the Fed has “steered the economy and the financial system into a cul-de-sac. The choice remains the same: keep printing and stoke accelerating inflation, or stop and watch the markets fall apart.” Lucky for us, the US government has another trick up its sleeve …<\/p>\n