{"id":77283,"date":"2023-02-25T01:15:19","date_gmt":"2023-02-25T09:15:19","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=77283"},"modified":"2025-02-28T09:35:28","modified_gmt":"2025-02-28T17:35:28","slug":"black-coffee-25-feb-2023","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id77283-black-coffee-25-feb-2023.html","title":{"rendered":"Black Coffee: How Not to Do It"},"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

Holding fiat currency for the long term is like holding a burning match.<\/em><\/p><\/blockquote>\n

– Doug Casey<\/strong><\/p>\n

It’s hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.<\/em><\/p><\/blockquote>\n

– Thomas Sowell<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? A recent survey found that 96% of Americans have less than $1 million<\/a> saved for retirement, and more than 50% have less than $20,000 saved. And that’s not the only<\/strong><\/em> red flag regarding the state of US households; it turns out that 401(k) withdrawals due to hardship increased from 2.1% to 2.8% from the year prior. That’s<\/strong><\/em> an increase of 33%. Yikes! And, yes, those hardship withdrawals are most definitely taxed – which may or may not<\/strong><\/em> be a good thing, depending on your point of view:<\/p>\n

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

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Debit:<\/strong><\/span> In case you’re wondering, the average 401(k) balance was $112,572 at the end of 2022 — a 20% drop<\/a> from the previous year. Now … I know what you\u2019re thinking; for a more realistic analysis, we need to avoid a picture skewed by the top range of accounts. Those of you who paid attention in math class know this is done by looking at the median account, where the balance of $27,376 saw a 23% decrease since year-end 2021. So it turns out that retirement account pain has been felt by almost everyone over the past year. Just don’t tell that to the Fed:<\/p>\n

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Debit:<\/strong><\/span> Then again, Americans are borrowing like never before, as US household debt swelled to a record $16.9 trillion<\/a> in the final quarter of 2022 – that was the largest quarterly increase in 20 years. Overall, household debt balances are now $2.8 trillion higher than at the end of 2019, which was the last year before the pandemic. The rising debt burden suggests that households are either borrowing because they’re wildly bullish on the economy – or they’re no longer able to maintain their standard of living without help from creditors. Which one do you<\/strong><\/em> think is more likely?<\/p>\n

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Credit:<\/strong><\/span> What is<\/strong><\/em> clear is that, after more than a decade of gross mismanagement of the US dollar (USD) by the Fed – in the form of its zero interest rate policy (ZIRP) – our debt-based monetary system is now in its death throes. Unfortunately, as macroeconomist Daniel Lacalle notes, America’s politicians aren’t worried<\/a>. And why is that? According to Lacalle, it’s because they fail to understand that “the process is slow – until it suddenly accelerates with hyperinflation and the state crumbles.” On the other hand, politicians aren’t the only<\/strong><\/em> ones that have trouble understanding things …<\/p>\n