Welcome to another exciting edition of Black Coffee, your unusual weekly digest of what’s going on in the world of money and personal finance.
I hope everyone has had a great week. And with that, let’s get straight to this week’s commentary, shall we?
American abundance was created not by public sacrifice for “the common good,” but by the productive genius of free men.
– In Edge
In many cases, servitude is not imposed by the masters, but by a temptation from the servants.
– Indro Montanelli
Credits and debits
Debit: Have you seen this? Walmart announced last week that it plans to roll out electronic shelf labels to 2,300 stores by the end of this year. The company says the technology allows employees to update shelf prices using a mobile app algorithm, reducing a price change that would typically take an employee two days to a matter of minutes. If you think about it, that is a mixed blessing, as we assume that prices – like gasoline – will be programmed to rise much faster than they are allowed to fall. We assume that the algorithm has already passed rigorous beta testing. Oh, and speaking of algorithms…
Credit: In the meantime, with housing affordability a top issue for many Americans, first-time homebuyers may be excited to hear that the current administration a new plan this week, Americans will be able to use their 401(k) accounts for down payments on homes. This is especially good news for potential homebuyers who are struggling to grow their savings to cover that down payment – or whatever. Talk about a great idea! Heck… dare we say it’s almost as financially savvy as this? (We said “almost.”)
Credit: In connection with this, a new bill has been introduced in Congress that would do just that excludes all capital gains from federal taxes. No, really. The question is: will it pass? Under current law, individual homeowners can exclude up to $250,000, and married couples up to $500,000, in capital gains if they have lived in the home for at least two of the past five years. Believe it or not, those ceilings haven’t been adjusted since 1997 – so those numbers aren’t as big as they used to be, at least in real terms. As for those who dare to ask why that is, our only answer is: well… the answer should be obvious. A bit like the answer to this:
Debit: In other news, a new survey found that 1 in 4 Americans took on debt this holiday season with an average balance of $500. Then there’s this: 34% of Americans say they plan to take a side job to pay off their debts by 2026, while 48% feel stressed about their spending. We wonder why. Oh, wait – no, we don’t….
Debit: It is not coincidental that the US government debt increased last year $2.2 trillion – and it is currently growing at about $71,800 per second. Unfortunately, US creditors are finally starting to notice as long-term US Treasury (UST) yields continue to rise despite the Fed’s recent cuts in short-term interest rates. Imagine that. As for how we got here, it’s becoming increasingly likely that this is still the case another “crazy conspiracy theory” that – like almost all the ones before it – will ultimately be true:
Credit: And as the astute precious metals analyst Franklin Sanders notes. ‘Just like those who are far away jungle drums in a 1930s Tarzan movie, those rising interest rates indicate that there will be trouble for the economy – and for the US dollar (USD). Indeed it is – and that’s why you should consider protecting yourself with small wealth insurance while it’s still available. The good news is that it is certainly easy to do. After all, the process is not much different from buying other types of insurance. For example…
Credit: On the other hand, there will always be those who still believe in the invincibility of the ‘Almighty Dollar’. But as macro analyst Daniel Oliver warns: “The UST bond complex has ruled the world since the 1960s, as other countries hoarded USTs as reserves. But if this mechanism breaks down – and it seems to be faltering – then the full weight of humiliation will hit the US. The market is already tearing up Congress’s credit card. Until 2022, the market was allowing ever-increasing shortages in gold. But while the headline deficit remains at crisis levels, the gold-denominated deficit has increased sharply since then.
Gary Larson – The Other Side
Debit: Of course, as Mr. Oliver points out, the valuation of the US gold shortage clearly illustrates that this “is the market”. reduce capital it will enable the government to borrow. In what world could that market provide a profligate spender with declining economic power with exponentially more capital?” As a result, he concludes that it is “unlikely that the market will continue to allow deficits at even current levels with respect to gold, meaning either the headline deficit will have to be reduced (also unlikely) or gold will have to continue to rise.” We agree; it is the last. But we’re sure most people won’t find out for quite some time – if at all. Others will:
Debit: Unfortunately, as Mr. Sanders notes, “Few people understand that in our fiat monetary system, all currencies are borrowed into existence…with an interest charge, so the system must keep blowing up – otherwise the interest cannot be paid, the debt bubble will burst, the money supply will deflate and a depression will ensue. And the immoral buzzards of fiat money are coming home fast and thick.” Indeed they are. The sad thing is that governments and central banks around the world have always known this – but they allowed it because it benefited them. Um, Despite what the destroyers are trying to tell you…
Credit: Why are so many people unaware that they are on a runaway train destined to destroy their wealth? Well… as Mr. Oliver explains, “While gold responds immediately to changing monetary conditions, it can take months or years for these changes to fully work their way through supply chains.” In other words, gold provides a very early warning to anyone who hears the alarm bells that a painful loss of USD purchasing power is coming. Fortunately, that is the case still time to preserve your wealth. But the clock is certainly ticking.
By the numbers
Collection accounts remain on an individual’s credit report for seven years and can seriously damage their credit score. With that in mind, a new study has identified where Americans’ financial well-being is most at risk, based on the states with the most debt collection accounts per capita. This is the current top 10:
10 North Dakota
9 Rhode Island
8 Idaho
7 Florida
6 Georgia
5 Arizona
4 Nevada
3 Montana
2 Alaska
1 Wyoming
Source: WalletHub
The question of the week
The results of last week’s survey
What are we having for dinner tonight?
American 61%
Something different 14%
Italian 12%
Mexican 8%
Chinese 5%
More than 2,100 Len Penzo dot Com readers responded to last week’s question and it turns out 1 in 7 of you ate something other than the “Big 4” cuisines on poll night.
If You If you have a question that you would like to see here, please send it to me Len@LenPenzo.com and be sure to include “Question of the Week” in the subject line.
Useless news: on the way home
A man spent the whole night in a pub. When he finally got up to leave at 2 a.m., he fell flat on his face. He then tried to get up again, but to no avail; he fell flat on his face again.
The man then decided to crawl outside, hoping the crisp fresh air would sober him up. But after lying in the cold early morning air for a few minutes, he stood up only to fall flat on his face again.
So, unable to sober up, the man decided he would crawl the four blocks from the pub to his house.
When he finally reached his front door, he stood up and fell flat on his face again.
Finally, the hopelessly drunk guy managed to get the door open and crawled into his bedroom.
When he reached the side of the bed, the man again struggled to get up. Just like before, he managed to pull himself up for a moment, before quickly falling again – though this This time he mercifully ended up on the bed, where he passed out as soon as his head hit the pillow.
The next morning the man woke up to find his wife standing over him, shouting, “So! I see you’re drinking again!”
“Why would you ever say that?” the man asked, feigning innocence as best he could.
“Because the bar called,” his wife replied. “You left your wheelchair there again.”
(h/t: Gregga)
Squirrel Cam
When the food is gone, the squirrels play…
DAVE.
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More useless news
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By Benjamin:
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