{"id":73192,"date":"2022-06-04T02:15:46","date_gmt":"2022-06-04T09:15:46","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=73192"},"modified":"2022-06-06T21:59:57","modified_gmt":"2022-06-07T04:59:57","slug":"black-coffee-4-jun-2022","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id73192-black-coffee-4-jun-2022.html","title":{"rendered":"Black Coffee: On the Horns of a Dilemma"},"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’ve got another busy weekend ahead of me, so let’s get right to this week’s commentary …<\/p>\n

You’ll never find your limit until you’ve gone too far.<\/em><\/p><\/blockquote>\n

— Aaron Rolston<\/strong><\/p>\n

Desperately seeking an escape route, he could see there was no way out except capitulation.<\/em><\/p><\/blockquote>\n

— CLR James<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Driven by soaring energy and food costs, new data released this week shows that consumer prices in Europe’s largest economy surged 8.7%<\/a> year-over-year (YoY) – that’s the highest rate in 60 years, when monthly data tracking started. And if that wasn’t bad enough, economist Friedrich Heinemann is warning that the worst is yet to come “because many inputs are still scarce and wholesale prices are still increasing dramatically.” Is that depressing to hear? Yes … but I know you didn’t come here expecting me to blow sunshine up your backside. That’s what the mainstream media is for.<\/p>\n

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Debit:<\/strong><\/span> One continent to the east, in yet another example of the spread of global stagflation that’s being largely ignored by the mainstream media, Pakistan is facing economic collapse<\/a> – that’s according to its own Finance Minister, folks. Pakistan’s “official” inflation rate is currently 13.4% – but the truth is it’s actually closer to double that figure. Regardless of which figure you use, it’s the fastest rising inflation rate in Asia. And, yes, this is the same Pakistan with a nuclear arsenal – not to mention an ongoing border conflict with India which has sparked three wars since 1947. But, hey … I’m sure there’s nothing to be concerned about.<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, here in North America, we learned this week that the Fed currently owns 38% of all outstanding Treasury bonds<\/a> with 10 to 30 years remaining until maturity. Yes; 38%!<\/strong><\/em> Remember, this isn’t some shallowly-capitalized boutique market. It’s supposed to be the “deepest” market in the world, currently valued at $22.6 trillion – which should send shivers down the spine of anyone who thought the United States was an unquestioned bastion of free-market capitalism.<\/p>\n

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Credit:<\/strong><\/span> For those of you who are wondering what the big deal is, Pam Martenson at Wall Street on Parade<\/em> explains that, by “gobbling up 38% of these 10-year US Treasury notes and 30-year US Treasury bonds, (the Fed) has created artificial demand<\/a> for these instruments that would not otherwise exist. That, in turn, means that mortgage rates have been artificially held much lower than they would otherwise have been.” In other words: Since 2008 the Fed has been using financial sleight of hand to prop up both the bond and<\/strong><\/em> housing markets. Look! It’s magic!<\/p>\n