{"id":75640,"date":"2022-11-12T01:48:36","date_gmt":"2022-11-12T09:48:36","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=75640"},"modified":"2023-10-28T08:15:15","modified_gmt":"2023-10-28T15:15:15","slug":"black-coffee-12-nov-2022","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id75640-black-coffee-12-nov-2022.html","title":{"rendered":"Black Coffee: Rock vs. Paper"},"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 an enjoyable week. Without further ado, let’s get right to this week’s commentary …<\/p>\n

A democracy is always temporary in nature. Once voters discover that they can vote themselves generous gifts from the public treasury, a majority will continue to choose candidates who promise the most benefits until the government becomes bankrupt.<\/i><\/p><\/blockquote>\n

— Alexander Fraser Tytler<\/strong><\/p>\n

Whenever destroyers appear among men, they … seize gold and leave to its owners a counterfeit pile of paper. Paper is a mortgage on wealth that does not exist … a check drawn by legal looters upon an account which is not theirs – upon the virtue of the victims. Watch for the day when it becomes marked: \u2018Account overdrawn.\u2019<\/em><\/p><\/blockquote>\n

— Ayn Rand<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? With relentless rising prices leading to a decline in real wages for the 19th consecutive month<\/a>, Main Street is clearly desperate for relief. How desperate? Well … the latest Newsweek<\/em> poll found that 63% of Americans want new government stimulus checks to “combat inflation.” No, really<\/a>. Apparently, 63% of Americans also failed basic high school economics.<\/p>\n

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

Debit:<\/strong><\/span> On a related note, the European Union’s (EU) “green” environmental policies have backfired so badly that a frightening deindustrialization<\/a> of the continent is now underway. How scary is it? Well \u2026 as a direct result of the EU’s self-inflicted energy shortage and sky-high prices, fully 10% of Europe’s crude steel production capacity is now idle, while all<\/strong><\/em> of Europe’s zinc smelters have either curbed production or shut down entirely. Meanwhile, half of its aluminum producers have been idled and 70% of its fertilizer factories have been closed. Heck …. it’s almost as if Europe is being run by insane nihilists.<\/p>\n

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(h\/t: @hedgeyeUSA)<\/p><\/div>\n

Debit:<\/strong><\/span> As central banks continue to raise rates, national banks within the European system and around the world are having to pay banks an increasing amount of interest over their excess reserves – and those expenditures are leading to losses on their balance sheets<\/a>. Now here’s the rub: At some point, these losses will put these central banks into a negative equity position – and that<\/strong><\/em> will eventually destroy confidence in their respective currencies.<\/p>\n

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(h\/t: r\/wallstreetsilver u\/1m_special)<\/p><\/div>\n

Credit:<\/strong><\/span> The “good” news for the Fed – as well as every other central bank out there – is that they’re holding a “Get Out of Debt Free” card that allows them to instantly regain solvency at any time by simply revaluing the gold on their balance sheet to a price that’s high enough to offset its losses. That effectively transfers the Fed’s losses to those holding both US dollars and dollar-denominated assets without having to print additional currency<\/a>. Yes; it’s devious. And I know exactly<\/strong><\/em> what you’re thinking: Is that really true? Can global central banks really get off the hook <\/em>that<\/strong> easily?<\/em> Well … in the words of a famous US Army private:<\/p>\n