{"id":76324,"date":"2022-12-24T01:15:56","date_gmt":"2022-12-24T09:15:56","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=76324"},"modified":"2023-10-28T08:15:53","modified_gmt":"2023-10-28T15:15:53","slug":"black-coffee-24-dec-2022","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id76324-black-coffee-24-dec-2022.html","title":{"rendered":"Black Coffee: The Last of the Big Spenders"},"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 wonderful week. And with that, let’s get right to this week’s commentary, shall we?<\/p>\n

Blessed are the young for they shall inherit the national debt.<\/em><\/p><\/blockquote>\n

– Herbert Hoover<\/strong><\/p>\n

He who buys what he does not need steals from himself.<\/em><\/p><\/blockquote>\n

— Swedish proverb<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? Thanks to the plummeting price of Tesla shares, Elon Musk is no longer the world’s wealthiest person<\/a>. Musk, who held the title since September 2021 when he took the title from Amazon founder Jeff Bezos, is now in second place, after losing the top spot to French billionaire Bernard Arnault. In case you’re wondering, Arnault made his fortune building the world’s largest luxury conglomerate, which includes designer brands like Louis Vuitton and Celine. In other words: over-priced vanity products that appeal to the “look at me” crowd. Speaking of Elon …<\/p>\n

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Debit:<\/strong><\/span> In other news, I see the US Congress just passed another frivolous spending bill<\/a> – all 4155 pages of it – to the tune of $1.7 trillion. That doesn’t sit well with the fiscal responsibility crowd, including the always-astute Franklin Sanders, who points out that “spending $1.7 trillion – which the government doesn\u2019t have – to do things it oughtn’t do anyway, means they’ll have to issue more debt for the Fed to monetize, goosing inflation yet more. Apparently the government won’t stop until the whole system rolls over the cliff<\/a> and into the hyperinflation abyss.” Yep. In the meantime, the pols will keep trying to buy your votes. Too bad the joke is on us …<\/p>\n

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Debit:<\/strong><\/span> On a related note, after a bout of massive pandemic-related spending in 2020 and 2021, this was the year that the chickens came home to roost – as 2022 was dominated by the resulting price inflation. Not coincidentally, the Fed, the BoE and the ECB all capped off the week with 50 basis-point rate hikes<\/a>. For the Fed, that brings its benchmark Fed Funds rate – which, in turn, influences every other interest rate – to 4.5%. Considering that the rate was still just 0.25% in March of this year, it’s safe to say that the negative economic impacts of such a sharp and rapid rate increase are still in the pipeline and waiting to be felt. Tick tock.<\/p>\n

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Debit:<\/strong><\/span> Speaking of the stock market, the current valuation of the stock market is approximately $42 trillion – and yet the entire GDP of the US is just $24 trillion. And this is while interest rates are the highest<\/a> they’ve been in 15 years. Um, okay … so what’s wrong with this picture? Or this one (my apologies in advance):<\/p>\n