{"id":91520,"date":"2026-08-08T01:00:06","date_gmt":"2026-08-08T08:00:06","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=91520"},"modified":"2026-08-07T08:38:10","modified_gmt":"2026-08-07T15:38:10","slug":"black-coffee-8-aug-2026","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id91520-black-coffee-8-aug-2026.html","title":{"rendered":"Black Coffee: That ’70s Show"},"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\u2019ve got another busy weekend ahead of me, so let\u2019s get right to this week\u2019s commentary\u2026<\/p>\n

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From the Great Depression, to the stagflation ’70s, to the Great Financial Crisis of 2008, to the current housing bubble, every economic downturn over the past century can be traced to the Fed flooding the economy with easy money, leading to a misallocation of resources and an artificial ‘boom’ followed by a recession or depression when the bubble bursts.<\/em><\/p>\n<\/blockquote>\n

\u2013 Ron Paul<\/strong><\/p>\n

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

Credit:<\/strong><\/span> Did you see this? Apparently, a growing number of people who are struggling to keep their head above water are now managing their budgets with an old money-management trick called \u201ccash stuffing<\/a>\u201d where, each month, they convert their take-home income into cash and then divide the money into labeled envelopes for specific spending categories like groceries, bills, and savings. The goal is to spend no more than that cash you\u2019ve set aside for each category. At the same time, cash stuffing also prevents credit card debt and stops impulse buying. That being said, we wonder how many \u201ccash stuffers\u201d decided to include an envelope for their retirement savings…<\/p>\n

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Debit:<\/strong><\/span> So… with a growing number of household managers trying new budgeting gimmicks to limit their financial red ink, perhaps it shouldn’t be a surprise that a new survey of 2000 people found that a majority of Americans say the cost of living is the worst they can remember<\/a>. In fact, 5 in 9 said the cost of living is the worst they have ever experienced, while slightly more than 1 in 4 said it’s bad, but they can also remember worse times. On the other hand, just 8% described the cost of living as “not bad.\u201d In the meantime, some of you may want to consider this<\/strong><\/em>…<\/p>\n

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Debit:<\/strong><\/span> On a related note, Congress is looking at imposing a cost of living adjustment (COLA) cap that would limit the annual US dollar (USD) increase of high-benefit recipients. The proposal that was first considered 40 years ago, but never implemented. The proposed flat-rate COLA<\/a> would cut the SS shortfall in half by setting the COLA received by a beneficiary at the 20th percentile of the benefit range; it’s a move that effectively creates a COLA cap with a COLA floor at the same level. The good news is: Doing so would boost SS benefits for the lowest-quintile beneficiaries by 13%. The bad news is it also slowly reduces the purchasing power of all top-quartile beneficiaries by roughly 19% over a 30-year period. Oh, and speaking of top-quartile beneficiaries…<\/p>\n

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Credit:<\/strong><\/span> In other news, after decades of decline, the National Association of Manufacturers (NAM) reports that American manufacturing has turned toward modest growth and factories returning<\/a> from overseas thanks to new investments spurred by a reduction in federal government red tape. The removal of bureaucratic road blocks has also been bolstered with corporate tax incentives that have led to new manufacturing investments that are currently underway in all 50 states. The trouble is, it takes time to build new factories \u2013 or take them out of mothballs \u2013 and get them up to speed. In many cases, the process can take several years. Just don\u2019t tell that to the Fed bureaucrats who publish their “GDP Now<\/a>” forecasts every week…<\/p>\n

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

Debit:<\/strong><\/span> Indeed, while the US industrial base on-shoring trend is positive, domestic manufacturing growth remains distinctly modest. In fact, NAM also notes that while American manufacturers added 3000 jobs in June, manufacturing employment has been in decline over the past few years and is slightly below pre-pandemic levels<\/a>. So there\u2019s that. As usual, it\u2019s hard to discern from the official data what is actually happening anymore.<\/p>\n

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Scott Adams – Dilbert<\/p><\/div>\n

Debit:<\/strong><\/span> On the other hand, there are far bigger problems out there than the status of the US manufacturing base. Perhaps the most concerning at the moment is the latest jobs report<\/a> from the Bureau of Labor Statistics, which confirms that the US is now officially suffering from stagflation \u2013 which we haven’t seen since the 1970s \u2013 thanks to contracting employment coupled with surging inflation. (Yes, even after the BLS gamed the numbers with their fraudulent “birth-death model” numbers.) Oh… and if you look under the hood, you’ll see that full-time positions have been declining for 6 of the past 7 months. Yeah… nothing to see here, folks. Besides, the stock market continues hitting new all-time highs. Magic!<\/p>\n

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Debit:<\/strong><\/span> Then again, that stagflation is primarily being driven by government debt \u2013 which only continues to get worse. And while we routinely remind you of the National Debt problem we are dealing with here in the US, that fast-approaching $40 trillion financial millstone around America\u2019s neck pales in comparison to the global<\/strong><\/em> debt time bomb, which is fast approaching $355 trillion<\/a>. No, really. The good news is, this can be managed. (Until it can’t…)<\/p>\n

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Debit:<\/strong><\/span> Meanwhile, in Japan, which currently has a debt-to-GDP ratio that is nearly twice the US\u2019s alarming ratio, more than one-quarter of its government spending is now being consumed to pay for past borrowing. And the debt service is now spiraling out of control as the Bank of Japan (BoJ) is being forced to raise interest rates \u2013 and therefore, the cost of debt service \u2013 in a desperate attempt<\/a> to save its currency (the yen). This is how all sovereign debt crises eventually start. The trouble is, eventually, central banks will have to choose between crashing their economies or destroying the remaining purchasing power of their currencies \u2013 even if they refuse to admit it.<\/p>\n