{"id":74960,"date":"2022-10-01T02:15:15","date_gmt":"2022-10-01T09:15:15","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=74960"},"modified":"2022-10-04T08:44:09","modified_gmt":"2022-10-04T15:44:09","slug":"black-coffee-1-oct-2022","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id74960-black-coffee-1-oct-2022.html","title":{"rendered":"Black Coffee: Decisions, Decisions"},"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

We can control our destiny, but not our fate. Destiny means there are opportunities to turn right or left – but fate is a one-way street.<\/em><\/p><\/blockquote>\n

– Paul Coelho<\/strong><\/p>\n

Paper is a mortgage on wealth that doesn’t exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which isn’t theirs: upon the virtue of the victims. Watch for the day when it becomes marked: ‘ACCOUNT OVERDRAWN.’<\/em><\/p><\/blockquote>\n

\u2013 Ayn Rand, Atlas Shrugged<\/em><\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? Bond yields jumped<\/a> last week after another major rate hike from the Fed, flashing a warning of market distress. Last week, the policy-sensitive 2-year Treasury yield climbed to nearly 4.3%, notching a 15-year high, and the benchmark 10-year Treasury hit 3.8% – that’s the highest in 11 years. Unfortunately, higher bond yields are not only bad news for first-time homebuyers, they’re bad news for the stock market and its investors because they create more competition for funds that may otherwise go into the stock market.<\/p>\n

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(h\/t: mediacloud.theweek.com)<\/p><\/div>\n

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Debit:<\/strong><\/span> Needless to say, higher rates are also bad news for the US government’s debt servicing costs. As a simplified example, 4% interest on $31 trillion of debt, is a $1.2 trillion hit on expenditures – that’s roughly 30% of tax revenues in a booming economy. And while that’s bad, the debt interest will take an even bigger bite out of those tax revenues during an economic downturn. It’s simple math that’s staring everybody in the face, but both the Fed and the government still refuse to acknowledge this – and the trouble it portends. Or, as market analyst Vince Lanci puts it, “Kicking the can down the road has become hide the pea<\/a>.”<\/p>\n

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(h\/t: r\/wallstreetsilver u\/onetroyounce)<\/p><\/div>\n

Credit:<\/strong><\/span> Of course, as the inimitable MN Gordon notes us, “centralized credit in the hands of a central bank always leads to money supply inflation. Asset price inflation and consumer price inflation then follow in strange and unpredictable ways. These price distortions are not defects of capitalism. They’re symptoms of a scam currency<\/a> managed by central planners.” Yep. Although “mismanaged” is probably the more appropriate term here. As for scam currencies, well … they’ve been around for a long, long<\/em><\/strong> time:<\/p>\n