{"id":69792,"date":"2021-11-20T02:15:29","date_gmt":"2021-11-20T10:15:29","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=69792"},"modified":"2021-11-24T07:37:25","modified_gmt":"2021-11-24T15:37:25","slug":"black-coffee-20-nov-2021","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id69792-black-coffee-20-nov-2021.html","title":{"rendered":"Black Coffee: The ‘Central Bank Turkeys’ Edition"},"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

It’s hard to soar with eagles when you’re surrounded by turkeys.<\/em><\/p><\/blockquote>\n

— Adam Sandler<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? California gasoline prices have never been higher<\/a>. This week they hit an average of $4.676, beating the previous all-time high of $4.671 for regular gasoline set in October 2012. Don’t laugh; it’s coming soon to a gas station near you too. Even so, the Bank of International Settlements will tell you higher fuel prices is a good<\/strong><\/em> thing because the potentially-lower demand will help “save” the world from “climate change.” Then again, take that with a heaping spoonful of salt because they also believe this<\/strong><\/em> …<\/p>\n

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Debit:<\/strong><\/span> Speaking of the Golden State, I see California has given away $20 billion in fraudulent unemployment benefits<\/a> since the beginning of the pandemic – that represents 11% of all benefits paid in the state. And if that’s not bad enough, $810 million in benefits were handed out in the names of people who were in prison, including dozens of infamous killers on death row. Hey … who says crime doesn’t pay?<\/p>\n

Credit:<\/strong><\/span> By the way, it’s not just criminals who are making bank from government-funded pandemic “stimulus” checks. Since the pandemic started, extra disposable income per capita is $10,500 per person, which led chartered financial analyst Bryce Coward to observe: “If we multiply that by the (US) population, we get $3.5 trillion. So it’s no wonder inflation has accelerated<\/a> to 30-year highs – especially when we consider supply-chain shortages.” Wow. It’s almost as if printing currency out of thin air without a corresponding increase in goods and services would lead to higher prices.<\/p>\n

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Debit:<\/strong><\/span> Despite the fact that many Americans may feel<\/strong><\/em> richer thanks to “stimmy” checks and\/or a pandemic-induced wage increases, real<\/strong><\/em> wages have declined<\/a> for seven straight months. In other words: Americans are actually getting poorer<\/strong><\/em> because US consumer prices have been rising faster than any gains in nominal<\/strong><\/em> income over the same period. You know … if this keeps up, it won’t be long before the general public finally figures out that there really is no such thing as a “free lunch” – just like they eventually realized back in 1970s:<\/p>\n

http:\/\/lenpenzo.com\/blog\/wp-content\/uploads\/2021\/11\/Inflation-Akroyd.mp4<\/a><\/video><\/div>\n

Credit:<\/strong><\/span> Not long after Jimmy Carter left office in 1980, Fed Chair Paul Volcker successfully killed the inflation monster by allowing interest rates to approach 20% – and that’s when something called ‘credibility inflation’ took root. The blogger known as FOFOA notes that, this was an “expanding confidence in the fiat system to always deliver a higher payoff tomorrow<\/a> than today – which ultimately destroys the currency structure by believing it can somehow deliver more than reality will allow.” The trouble is, it has been delivering far more than reality should<\/strong><\/em> allow … but that game is officially over:<\/p>\n

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Debit:<\/strong><\/span> Of course, the financial media is largely responsible for this subterfuge; but with rising prices now seemingly out of control, their propaganda is finally unraveling because inflation can no longer be hidden<\/a>. According to FOFOA, “Credibility inflation is why we saw low consumer price inflation for the last 40 years relative to the massive monetary and financial product inflation. Yet it’s far more catastrophic in the end.” As we’re all finally beginning to see. Okay … at least some<\/strong><\/em> of us.<\/p>\n

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Credit:<\/strong><\/span> Interestingly, macroeconomist Alasdair Macleod says that, “It’s becoming clear that there has been an unofficial agreement<\/a> between the Fed, Bank of England, the ECB and probably the Bank of Japan to not raise rates based on remarkably similar statements from the former three in recent days. When they’re all singing off the same hymn sheet, we’re right to suspect they’re doubling down on a market rigging exercise encompassing all financial markets.” Ya think?<\/strong><\/em><\/p>\n

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Credit:<\/strong><\/span> Market analyst Peter Boockvar can see what’s happening. He says, “the Fed’s idea of confronting 6% inflation is to increase their balance sheet by another $500 billion over the next eight months and still have rates at zero. For now they’re not credible<\/a>, but we’ll see if reality forces their hand to act more aggressively – albeit at the risk of (lower) market valuations and eventually the economy. It’s a tough spot, but a self imposed one.” In the meantime, we’ll keep waiting for the Fed to put on its big-boy pants and finally defend the dollar from being debauched into oblivion. Just don’t hold your breath.<\/p>\n

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Credit:<\/strong><\/span> So why are the central banks seemingly content to allow inflation to run unabated, despite the possibility that at some point it will destroy the currency? Market analyst Michael Lebowitz confirms what many monetary system observers figured out quite a while ago. He says, “They should halt QE immediately<\/a> and raise rates tomorrow. But they won’t because doing so would (crash) the markets, and that trumps everything at the Fed.” More to the point: The Fed will never<\/strong><\/em> raise rates because they’re actually beholden to the banks and the government it serves, not us little people on Main Street.<\/p>\n

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Credit:<\/strong><\/span> Unfortunately for the Fed, they are well aware that our debt-based monetary system will implode if asset prices collapse – so QE must continue until the dollar’s purchasing power is destroyed, which is why asset manager Egon VonGreyez warns that they’re working on introducing central bank digital currencies (CBDCs) in an attempt to fool the people. “They’ll tell us the old debt in dollars has remarkably disappeared and that we now have a miraculous new monetary system<\/a> – but CBDCs are just another form of fiat currency that won’t survive.” Amen, Brother Egon. It’s gold (and silver) or bust!<\/p>\n

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Debit:<\/strong><\/span> Indeed, VonGreyerz offers a reality check against any Fed claims that CBDCs will solve our current fiscal problems<\/a>: “You can’t just let one side of the balance sheet disappear without affecting the other side. So if the debt is written down to zero, so too will all assets financed by this debt – which is why we’ll see all market bubbles collapse as much as 90% in real terms, including the stock, bond and property markets.” This is the Achilles’ heel of our debt-based monetary system, where our paper “wealth” is literally somebody else’s “debt.” It’s all a big con game. And, we’re<\/strong><\/em> the marks.<\/p>\n