{"id":86589,"date":"2025-03-08T01:00:31","date_gmt":"2025-03-08T09:00:31","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=86589"},"modified":"2025-03-12T07:36:03","modified_gmt":"2025-03-12T14:36:03","slug":"black-coffee-8-mar-2025","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id86589-black-coffee-8-mar-2025.html","title":{"rendered":"Black Coffee: Brought to You By the Letters M, B and T"},"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 an enjoyable week. Without further ado, let’s get right to this week’s commentary …<\/p>\n

A smart man makes a mistake, learns from it, and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid the mistake altogether.<\/em><\/p><\/blockquote>\n

– Roy H. Williams<\/strong><\/p>\n

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

Debit:<\/strong><\/span> Did you see this? A Citigroup attempt to credit a client’s account with just $280 went wildly wrong, with the financial services giant crediting it with $81 trillion instead<\/a>. Yes; that’s trillion with a “t.” To put that $81 trillion figure in perspective, consider that the current M2 measure of US money supply is \u201conly\u201d $22 trillion. Hey \u2026 the error is completely<\/strong><\/em> understandable. I mean, we all<\/strong><\/em> make data entry errors of 11 additional significant digits from time to time. Besides, there are mistakes out there that are far more dangerous …<\/p>\n

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Debit:<\/strong><\/span> For those of you who aren\u2019t counting at home, this followed the accidental transfer of $900 million<\/a> to Revlon in 2020. Yes; that’s million with an “m.” Never mind that that’s<\/strong><\/em> nearly $1 billion – with a “b.” Regardless, it\u2019s extremely gratifying to learn that Citigroup has been diligently working over the past four years to correct obvious flaws with their technology and errors in their quality control policies.<\/p>\n

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Debit:<\/strong><\/span> In other news, this week the Fed forecast that GDP would finish the first quarter of this year at a negative<\/strong><\/em> 2.8%. That contraction estimate marks the worst forecast<\/a> since the 2020 pandemic. That shouldn’t be too surprising because the Fed can’t seem to learn from its own<\/strong><\/em> mistakes. As macro analyst Jesse Columbo points out, “In general, the Fed raises rates until something breaks – and that something is typically industries or speculative booms that flourished in the prior low-rate environment.” Then they print even currency to paper over the carnage.<\/p>\n

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Here’s a historical look at the Fed Funds Rate since 1975. Notice that every Fed hiking cycle has led to financial crises of varying degrees. (h\/t: Jesse Columbo)<\/p><\/div>\n

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Coming soon …<\/p><\/div>\n

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Debit:<\/strong><\/span> A big reason for the Fed\u2019s poor outlook on GDP is due to stagflationary signals<\/a> that became more obvious this week. First it was slower consumer spending. That was followed by the latest PCE price index showing inflation is running at 2.5% annually. Meanwhile, consumer sentiment is only worsening amid these economic pressures, with most Americans reporting their incomes aren’t keeping up with the latest spike in inflation – and that<\/strong><\/em> is holding down household savings and discretionary spending. In other words: the economy is a mess.<\/p>\n

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Source: Incrementum via @IGWTReport<\/p><\/div>\n

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Debit:<\/strong><\/span> Despite the Fed\u2019s worsening economic sentiment – not to mention US government and<\/strong><\/em> private sector plans to reduce payrolls<\/a> at the fastest pace since the 2020 pandemic – major American stock market indices are only now starting what appears to be a noticeable pullback from their all-time highs \u2026 which just goes to show that, upon a quick glance, things aren’t always<\/strong><\/em> as they seem.<\/p>\n

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Debit:<\/strong><\/span> Although it may seem like it, the price of everything<\/strong><\/em> isn\u2019t climbing. The highly-speculative asset better known as bitcoin fell 17% in February<\/a>, marking the cryptocurrency’s worst monthly performance in nearly three years. It could have been worse – after topping at $109,000 the crypto coin traded below $80,000 on the last day of the week before staging a late rally. Oh, well \u2026 live by the scam, die by the scam.<\/p>\n

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\nCredit:<\/strong><\/span> On a somewhat related note, US Treasury Secretary Scott Bessent says he expects that by July of next year, DOGE could ultimately root out $300 billion<\/a> in federal waste, fraud, and abuse; that\u2019s about 1% of GDP. Bessent added that the cost-cutting agency has already uncovered substantial inefficiencies – along with a staggering amount of outright fraud. He admitted that, when in comes to waste, fraud, and abuse most people think in terms of waste and abuse, but “I\u2019ve got to tell you that I\u2019m slightly shocked at the fraud we\u2019re finding.\u201d Really? Because we\u2019re not, Mr. Secretary. At all.<\/p>\n

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h\/t: @LibertyPillMeme<\/p><\/div>\n

Debit:<\/strong><\/span> Unfortunately, 50 years of price suppression in the world’s only true safe haven from our debt-base fiat monetary system – that is: physical gold<\/strong><\/em> – will ultimately manifest in a much bigger spike in food price inflation over the coming years. In fact, precious metal analyst David Jansen warned last week that, “as capital continues to move from intangible investment assets, into which monetary inflation was temporarily diverted, and into real goods like gold and food stuffs, we will increasingly see food poverty<\/a> and famine show its face – in the West.\u201d And you thought tariffs were going to be a problem. Or not …<\/p>\n

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Credit:<\/strong><\/span> Fortunately, the world is finally waking up to the fact that gold is currently undervalued<\/a>. How much? Well \u2026 according to macro analyst Egon VonGreyerz, “at $2920, all the gold officially held by the world\u2019s central banks amounts to approximately $3 trillion. At the same time just one<\/strong><\/em> US stock \u2013 Microsoft \u2013 has a market cap of $3 trillion. (So) a single company<\/strong> <\/em>equals the total value of all central bank gold holdings.\u201d Now … I know what you’re thinking: What, exactly, is going on inside the brains of people who actually believe that these absurd numbers make sense?<\/em> Well … if we had to guess, probably something like this:<\/p>\n