{"id":73421,"date":"2022-06-18T02:15:41","date_gmt":"2022-06-18T09:15:41","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=73421"},"modified":"2024-01-27T11:23:58","modified_gmt":"2024-01-27T19:23:58","slug":"black-coffee-18-june-2022","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id73421-black-coffee-18-june-2022.html","title":{"rendered":"Black Coffee: Too Little Too Late"},"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

Well … another busy week is behind us. So with that in mind, let’s get this party started …<\/p>\n

Better three hours too soon than a minute too late.<\/em><\/p><\/blockquote>\n

– William Shakespeare<\/strong><\/p>\n

The future ain’t what it used to be.<\/em><\/p><\/blockquote>\n

– Yogi Berra<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Thanks to surging energy costs, US consumer prices continued accelerating<\/a> in May, rising by a far-larger than expected 1.0%. That sent the government’s “official” inflation rate as measured by the CPI to a new cycle high of 8.6% year-over-year (YoY), which is its highest level since 1981 – and the 24th consecutive month that the CPI has increased from the previous month. Which should be no surprise to anyone who has to buy things in order to live. Or enjoy a quick bite to eat with a friend at the local burger joint:<\/p>\n

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Debit:<\/strong><\/span> Then again, back in 1981 the CPI calculation was based on reality, rather than substitutive hedonic hocus pocus and other obfuscating methodologies intended to ensure continued confidence in the fiat dollar. In fact, when using the 1981 calculation, real inflation is nowhere near 8.6% – rather, it’s 17%<\/a>.<\/p>\n

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(h\/t: Wall Street Silver)<\/p><\/div>\n

Debit:<\/strong><\/span> And if that isn’t bad enough, real average hourly earnings have fallen roughly 3.0% year-over-year, meaning that the rise in the cost of the goods that you buy is outpacing the rise in your wages – for the 14th straight month! According to estimates by Bloomberg Economics, US households will spend $5200 more<\/a> this year than they did last year on the same consumption basket – that’s $433 more extra each month. Now for the really bad news … those numbers are based on the misleading “official” inflation figure – not the one using the 1981 methodology. Regardless, the consumer is still in a pickle:<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, the “Almighty Dollar” – and the American Empire that it supports – are both in their waning days, with the US on the hook for more than $200 trillion<\/a> in both funded an unfunded liabilities, versus a GDP of $24 trillion. Well … unless you think the rapidly-growing divergence between total debt and GDP as shown on the following chart is sustainable. (Psst. It’s not.)<\/p>\n

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(h\/t: Lyn Alden)<\/p><\/div>\n

Credit:<\/strong><\/span> By the way, for those of you who continue to insist that the US dollar isn’t going anywhere<\/strong><\/em>, macro analyst Bill Holter says think again. “There’s going to be a currency collapse<\/a> because the dollar isn’t supported by anything other than debt.” Holter goes on to say that a currency collapse “is mathematically certain because there’s now far more debt than available assets on the books – and if the debt can’t be paid, then the currency becomes worthless.” Ah, Bill … there you go again – relying on math to support your conclusions. It’s no wonder everybody accuses you of wearing a tin foil hat.<\/p>\n

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Credit:<\/strong><\/span> Somewhat surprisingly, economist Larry Summers – who was the US Treasury Secretary under Bill Clinton – suggested that the demise of the US dollar was not out of the realm of possibilities, although he refused to blame that potential outcome on America’s massive debt overhang; rather, he said it would be due to “the basic credibility of our country’s institutions (being) undermined. Because if you can’t trust the government, why should you trust its money<\/a>?” Actually, it’s vice versa, Larry. But at this point, why quibble? Then again …<\/p>\n