{"id":90225,"date":"2026-01-17T01:00:23","date_gmt":"2026-01-17T09:00:23","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=90225"},"modified":"2026-01-21T10:01:14","modified_gmt":"2026-01-21T18:01:14","slug":"black-coffee-17-jan-2026","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id90225-black-coffee-17-jan-2026.html","title":{"rendered":"Black Coffee: Smoke and Mirrors"},"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

When a government debases the currency to cheat its creditors, this procedure is given the polite name of ‘inflation.’<\/em><\/p><\/blockquote>\n

\u2013 George Bernard Shaw<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? Artificial intelligence (AI) is increasingly shaping everyday financial decisions, and that growing reliance could be risky. Even so, 82% of Americans say they trust AI<\/a> when it comes to financial information and guidance, and 64% say their financial health has improved since using AI. We suspect this has helped a bit too…<\/p>\n

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Debit:<\/strong><\/span> Unfortunately, it\u2019s going to take more than AI to stop the middle class from getting squeezed. Whether it\u2019s housing, healthcare, childcare, fuel, food or taxes, the cost of modern life has exploded. The US currently sets its official poverty line for a family of four at $32,150. However, no longer reflect reality because the benchmarks they use are from the 1960s. As a result, measuring the cost of living in terms of gold instead of US dollars (USD), reveals a very<\/strong><\/em> different story. How different? Well\u2026 according to precious metals analyst Mike Maloney, the current USD gold price implies an actual poverty line of $140,000 a year. No, really<\/a>.<\/p>\n

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Credit:<\/strong><\/span> On the other hand, despite the major US stock indices being slightly down for the week, Wall Street is doing just fine, thank you very much. The markets were relatively unfazed<\/a> by the growing uncertainty over the next Fed chair, or ongoing geopolitical tensions. In fact, the Dow, S&P, and Nasdaq all ended the week down about 1%. Even so, all three indices are still near their all-time highs. As for those timid investors who decided to finally<\/strong><\/em> dip a toe in the water and take a chance on cryptocurrencies for the first time last year, well…<\/p>\n

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Debit:<\/strong><\/span> In other news, credit card-lending has become more lucrative than ever, with JPMorgan saying that last year the net yield on its more than $200 billion in card loans was 9.7%. With that in mind, the current administration is proposing a 10% cap<\/a> on credit card expenses. The good news is, bipartisan legislation was introduced in Congress last year that would do exactly that for five year period. Needless to say, card issuers weren\u2019t impressed, which means don\u2019t expect rates to be capped anytime soon.<\/p>\n

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Credit:<\/strong><\/span> Then again, not everyone is enamored with the idea of a cap on credit card interest rates. Why? Well\u2026 according to WalletHub CEO, Odysseas Papadimitriou, “Capping credit card interest rates at 10% is a horrible idea. yes, people who currently have credit card debt will get some short-term relief, but the move will inevitably block millions of people whose credit history does not merit a 10% APR<\/a> from accessing credit at all.\u201d The good news is, THAT will force people to save more. That being said …<\/p>\n

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Debit:<\/strong><\/span> On a related note, with the median US home now selling for $410,800, nearly 3 in 5 millennials say they are planning to spend less<\/a> than $400,000 on their home purchase. Even so, 44% of millennials \u2013 including half of all first-time buyers \u2013 would be willing to spend more than half of their monthly income on housing to be able to afford a home. Yikes. Good luck with that. Especially now that the US announced that it is committed to lowering mortgage interest rates, which will only serve to artificially prop up the housing market.<\/p>\n

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Credit:<\/strong><\/span> To nobody’s surprise, mortgage rates immediately fell below 6%<\/a> for the first time in three years, after lending giants Fannie Mae and Freddie Mac were directed to buy $200 billion in mortgage backed securities. And while Fed officials insist this will increase housing affordability, the reality is the only way to make homes more affordable in the long-run is to crash the housing market with double-digit interest rates. Hey \u2013 never say never\u2026<\/p>\n

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Credit:<\/strong><\/span> For those who fail to understand the irony behind higher interest rates making homes more affordable, consider this example: All else being equal<\/a>, the monthly payment on a $400,000 30-year mortgage at 6% is $2398, while the same payment on a $250,000 mortgage at 10%<\/strong><\/em> is almost $200 lower \u2013 and a $200,000 mortgage at 10% is just $1755. As an added bonus, when\/if interest rates eventually fall again, those payments have the potential to drop even further in the future by refinancing the mortgage. That being said, this is apparently only an issue for us commoners \u2013 or so they say<\/strong><\/em>…<\/p>\n

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Gary Larson – The Far Side<\/p><\/div>\n

Credit:<\/strong><\/span> Despite first-time homebuyers struggle to enter the market, and the middle class getting squeezed, the value of all US households’ stock portfolios rose ‍by $5.5 trillion<\/a> in the second quarter of 2025, while the value of real estate \u2060holdings rose by $300 billion. During the same period, the ‍net worth of households and nonprofits rose ‍to $182 trillion, from $176 trillion. But don’t be fooled. Rather than a sign of a healthy economy, this dichotomy is yet another sign of the falling purchasing power of the USD \u2013 all thanks to the US government\u2019s insatiable appetite for debt…<\/p>\n