{"id":81366,"date":"2023-12-16T01:15:53","date_gmt":"2023-12-16T09:15:53","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=81366"},"modified":"2023-12-21T08:04:23","modified_gmt":"2023-12-21T16:04:23","slug":"black-coffee-16-dec-2023","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id81366-black-coffee-16-dec-2023.html","title":{"rendered":"Black Coffee: The Great Unwashed"},"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

Well … another busy week is behind us. So with that in mind, let’s get this party started …<\/p>\n

The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets.<\/em><\/p><\/blockquote>\n

— Robert Kiyosaki<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? When it comes to having financial security in retirement, Shark Tank<\/em> star Kevin O\u2019Leary recommended this week that we should have at least a $5 million nest egg<\/a> to ensure we don\u2019t outlive our savings. Huh. Then again, I guess that\u2019s easy for him to say; O\u2019Leary\u2019s net worth is in the neighborhood of $400 million. At the same time, Fidelity says the average baby boomer 401(k) balance is $212,600, while the average retiree IRA account is $201,600. So if they don’t want to be eating cat food for dinner, they better pick up the pace. Meanwhile, back here in the real world …<\/p>\n

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Debit:<\/strong><\/span> Hey … here\u2019s an interesting bit of trivia: According to David Stockman, who is a former Director of the Office of Management & Budget, \u201csince money-printing went into permanent high gear after the Dotcom crash in 2000, the top 1% of households have gained $20 million each<\/strong><\/em><\/a> in inflation-adjusted net worth.\u201d Interesting. We’re just wondering: How does that compare to your<\/strong><\/em> situation? Oh … and while you’re thinking about that:<\/p>\n

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

Credit:<\/strong><\/span> The Fed has been doing its best to shrink the money supply in an effort to tame inflation after trillions of dollars were conjured out of thin air and unleashed by the central bank during the pandemic. In fact, money supply has been contracting without interruption since turning negative in November 2022 for the first time in 28 years. Despite that, for some reason this week the Fed signaled to the rest of the world that it plans on reducing rates<\/a> in the near future. And that<\/strong><\/em> sent stocks, bonds, housing and even gold sharply higher, thereby adding fuel to the “everything bubble” the Fed has been trying to deflate – not to mention inflation. No, really. If you’re confused, rest assured that you’re not alone …<\/p>\n

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Credit:<\/strong><\/span> Last week, economist Ryan McMaken pointed out that, “If the Fed reverses course now, and embraces a flood of new money, prices will only spiral upward<\/a>. It didn’t have to be this way, but ordinary people are now paying the price for a decade of easy money cheered by Wall St. and the profligates in DC. The only way toward a more stable long-term path is to stop (printing) money – that means a falling money supply and popping economic bubbles. But it also lays the groundwork for a real economy built by saving and investment, rather than artificially-low interest rates and easy money.” Amen to that.<\/p>\n

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Credit:<\/strong><\/span> For his part, macro analyst Brandon Smith says that while inflation is bad now, it still doesn\u2019t compare<\/a> to the erosion of purchasing power during the 1970s. Back then, he says, “The country was truly on the edge of disaster. Then, in the early 1980s, under Paul Volcker\u2019s leadership the Fed jacked interest rates up to over 20%. This stopped the inflation crisis but triggered a deflationary plunge that would sit like a giant boulder on the chest of the American consumer and small business owners for years to come. In other words, as bad as the situation is now, we haven\u2019t seen anything yet.” The truth hurts, I guess. And on that note: Merry Christmas to you too …<\/p>\n