{"id":87248,"date":"2025-04-26T01:00:25","date_gmt":"2025-04-26T08:00:25","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=87248"},"modified":"2025-04-30T10:03:00","modified_gmt":"2025-04-30T17:03:00","slug":"black-coffee-26-apr-2025","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id87248-black-coffee-26-apr-2025.html","title":{"rendered":"Black Coffee: Buy Now. Pay Later."},"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

\n

Debt is the secret foe of thrift, as vice and idleness are its open foes. The debt-habit is the twin brother of poverty.<\/em><\/p>\n<\/blockquote>\n

– Theodore Munger<\/strong><\/p>\n

\n

Good times are when people make debts to pay in bad times.<\/em><\/p>\n<\/blockquote>\n

– Robert Quillen<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? It has been almost ten years since Sam\u2019s Club – which is WalMart\u2019s version of Costco – launched “Scan & Go, an application that allows its members to scan and pay for their products using their cell phone. Now the store is going to the next level<\/a>, as they plan to completely phase out traditional checkout stands in order to create “friction-free” shopping with the addition of an artificial intelligence (AI) scanner at the exit to verify their customers’ purchased goods as they leave. Well … at least the customers who are still willing to stick around.<\/p>\n

\"\"<\/p>\n

\"\"<\/p>\n

Debit:<\/strong><\/span> In other news, Wall Street celebrated as stock market investors decided to buy the dip<\/a>. The good news is that, for the week, the Nasdaq rose 6.7%, the S&P 500 climbed 4.6% and the Dow finished 2.5% higher. With these latest gains, Nasdaq is now slightly positive for the month, but the S&P 500 and Dow are still down month-to-date 1.5% and 4.5%, respectively. The bad news is that all three major indices still appear to be in the middle of a frustrating bear market rally where the indices merely end up painting a series of not only lower highs – but lower lows<\/strong><\/em> too.<\/p>\n

\"\"
\n\"\"<\/p>\n

Debit:<\/strong><\/span> Meanwhile, back on Main Street, the Philly Fed Manufacturing Business Outlook survey crashed to its weakest level in two years<\/a>. Not coincidentally, new orders also fell sharply in March – to its lowest level in 5 years – while the prices paid index edged up to its highest reading since July 2022. Um \u2026 can you say \u201cstagflation\u201d? Never mind that the Fed says their models show no sign of it. Then again, the Fed also said in 2021 they saw no evidence of high inflation. The good news is, there’s at least one politician out there who is<\/strong><\/em> paying attention – and she has a \u201csolution\u201d that\u2019s so<\/strong><\/em> “good” it\u2019s hard to believe nobody ever thought of it before …<\/p>\n

\"\"<\/p>\n

\"\"<\/p>\n

Debit:<\/strong><\/span> Of course, slowing demand and rising prices seem counterintuitive. But that scenario is entirely possible with out-of-control government debt accrual and a Fed willing to finance it via a rapidly-expanding currency supply. In fact, since 2000, the US National Debt has soared more than sixfold, from under $6 trillion to a staggering $36.7 trillion<\/a> today – and that figure is now growing by $1 trillion every 100 days. And yet, somehow, we keep rollin’ down the highway without a care in the world. Oh, wait …<\/p>\n

\"\"
\n\"\"<\/p>\n

Debit:<\/strong><\/span> On a related note, most people are unaware that the US didn\u2019t experience persistent, steady inflation until after the Fed\u2019s inception in 1913<\/a>. From that point forward, the Fed gradually implemented monetary policy decisions that ultimately debauched the US dollar (USD) – resulting in its steadily eroding purchasing power and, eventually, a falling American living standard. Unfortunately, the pain resulting from higher living costs was numbed for the last several decades with cheap imports. A treatment that, as Ross Perot – and later Warren Buffett – correctly warned, would work great … until it didn’t. (Pro tip: It doesn’t anymore.)<\/em><\/p>\n

\"\"<\/p>\n

\"\"

h\/t: @DragonDan90<\/p><\/div>\n

Credit:<\/strong><\/span> That\u2019s right; with few exceptions, the period between the end of the Civil War in 1865 and the turn of the 20th century saw prices for most goods and services remain steady – or slightly decline<\/a>. As a result, Americans’ living standard during this period improved markedly. It\u2019s not a coincidence that the US was on a gold (and silver) standard during this time frame. If you don\u2019t believe us, check out this chart from the Fed itself, annotated by market analyst Jesse Columbo. Keep in mind it is based on the US Consumer Price Index (CPI), which has terribly understated the inflation rate since 1980. The good news is the market has come up with a way to “help” …<\/p>\n

\"\"<\/p>\n

\"\"

Source: Jesse Columbo<\/p><\/div>\n

\"\"<\/p>\n

Credit:<\/strong><\/span> As Mr. Columbo points out, a better way to understand just how debauched the USD has become is to realize that, as late as 1933, $1000 would buy almost 50 ounces of gold. “But as the USD was gradually debased<\/a>,\u201d he says, “it bought less and less. Today, $1000 purchases just 0.31 ounces of gold. That represents a staggering 99% loss in the USD\u2019s purchasing power relative to gold over the past century.\u201d Oh … and speaking of lost purchasing power …<\/p>\n