{"id":80704,"date":"2023-10-28T01:15:02","date_gmt":"2023-10-28T08:15:02","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=80704"},"modified":"2023-10-31T06:52:11","modified_gmt":"2023-10-31T13:52:11","slug":"black-coffee-28-oct-2023","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id80704-black-coffee-28-oct-2023.html","title":{"rendered":"Black Coffee: For the Fed, It’s the Frying Pan or the Fire"},"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

We stand today at a crossroads. One path leads to despair and utter hopelessness; the other leads to total extinction. Let us hope we have the wisdom to make the right choice.<\/em><\/p><\/blockquote>\n

— Woody Allen<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? A recent Harris Poll suggests that the picture is grim for new homebuyers. In fact, 64% of Americans say they are “ready for a recession<\/a>” if they are better able to afford to buy a home. Keep in mind that this survey was conducted in June – and housing affordability has only gotten worse since then. Of course, you can always rent – as long as your willing to comply with the landlord’s covenants. Or not …<\/p>\n

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Debit:<\/strong><\/span> In other news, according to Bloomberg<\/em>, it takes now “somewhere between $3 million and $5 million<\/a>” to retire comfortably. I don’t know about that. Although I guess that might be true if you plan on living to be 101-years-old. Or you’re a dedicated beer connoisseur …<\/p>\n

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Credit:<\/strong><\/span> On the other hand, a new study by Moneyzine<\/em> has found that the average American will have to save $658,883<\/a> to retire with the standard of living they’re currently accustomed to. According to the study authors, this should take the average American 22 years to save with compound interest. As for those who plan on living to the oldest recorded age of 122, they say one needs to save $2,963,879 in today’s dollars. Maybe; maybe not. As one Zero Hedge commenter deftly points out, “where<\/strong><\/em> you retire is 100 times more important than how much money<\/strong><\/em> you have saved up.” Yes; because everything<\/strong><\/em> is relative. I think.<\/p>\n

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Debit:<\/strong><\/span> Indeed, US Treasuries are in the midst of their worst drawdown<\/a> in the last five years. In fact, for longer-duration Treasury debt, the maximum drawdown is approaching 50%; that’s huge for an asset that is supposed to be \u201crisk free.\u201d Now for the punchline: Selloffs in Treasuries are compounded by inflation-induced purchasing power loss of the US dollars (USD) they are denominated in. Although you’d never know inflation was still a problem if you followed the government’s official data …<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, long-term Treasuries are pushing 5% and as a result, there are many people out there who believe the Fed is finally losing control<\/a> of interest rates – at least until they restart the printing press again, which will pour gasoline on the inflation fire that is currently raging, not to mention drive yet another nail into the USD’s global reserve currency status. I don’t know if the Fed has lost control, but they are definitely in rough waters. How rough? Would you believe this<\/strong><\/em> rough?<\/p>\n