{"id":78821,"date":"2023-06-03T01:15:47","date_gmt":"2023-06-03T08:15:47","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=78821"},"modified":"2023-06-06T09:19:05","modified_gmt":"2023-06-06T16:19:05","slug":"black-coffee-3-june-2023","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id78821-black-coffee-3-june-2023.html","title":{"rendered":"Black Coffee: The Sky’s the Limit"},"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

Debts nowadays are like children; begot with pleasure, but brought forth in pain.\u00a0<\/em><\/p><\/blockquote>\n

– Moliere<\/strong><\/p>\n

Arithmetic is where the answer is right, everything is nice, and you can look out the window and see blue sky – or the answer is wrong, and you have to start over and try again. <\/em><\/p><\/blockquote>\n

– Carl Sandburg<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? A tentative debt ceiling deal<\/a> was reached last weekend that raises it by roughly $4 trillion over the next two years. Frankly, it’s all one giant scam. Especially when you consider it’s a date-driven debt limit that permits unlimited<\/strong><\/em> spending through 31 December 2024 – which means we get to enjoy the next debt ceiling drama starting in November 2024. By then, the National Debt should be pushing $37 trillion, if not more. Well … assuming our fraudulent debt-based monetary system is still intact by then.<\/p>\n

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Credit: <\/strong><\/span>Then again, just because the political theater of the most recent debt ceiling negotiations is apparently over, macro analyst Tavi Costa says there is a growing realization “that the true risk this time around lies not in the failure to reach a debt ceiling agreement, but rather in the escalating debt<\/a>.” He goes to warn that, in the past, “the responsibility of absorbing this debt fell on the US banks, but they’ve withdrawn from that role, (which) may necessitate the intervention of the Fed as the buyer of last resort.” Needless to say, Congress is betting that the pool of suckers willing to extend more credit to their bankrupt organization hasn’t dried up.<\/p>\n

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Debit:<\/strong><\/span> Speaking of the federal debt, for the US, implicit debt at the federal level for social spending and Medicare is estimated at slightly more than 400% of GDP<\/a>. This is in addition to explicit debt amounting to 127% of GDP. In the meantime, it’s the same ol’ same ol’ …<\/p>\n

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

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

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Credit: <\/strong><\/span>Indeed, the growing US debt – along with America’s weaponization of the US dollar (USD) – are big reasons why the world, led by China, India, Russia, and Saudi Arabia are actively moving away<\/a> from a dollar-centric trading system. But this needs to be put into perspective because, despite the USD’s share of central banks’ foreign reserves having fallen to a two-decade low, it’s still at similar level as 1995. Now … if only the inflation we’re suffering with today was at a similar level to 1995.<\/p>\n

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(h\/t: u\/CookedMaggot)<\/p><\/div>\n

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Credit: <\/strong><\/span>Of course, a large national debt can be sustained indefinitely by a government so long as it can manage paying the interest on the debt<\/a>. And for the past 25 years or so, servicing the debt was relatively painless because interest rates have been absurdly low. However, that all changed last year, when the Fed started sharply raising interest rates in a desperate – not to mention very<\/strong><\/em> tardy – attempt to contain inflation. At least that was the plan they drew up. As for how that’s been working out, well … what’s that old saying about the best-laid plans of mice and men?<\/p>\n