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.
Well … another glorious week comes to an end, so let’s get this party started, shall we?
The Bank never goes broke. If the Bank runs out of money, the Banker may issue as much more as may be necessary by merely writing on any ordinary paper.
— From the Rules of Monopoly
O, what a tangled web we weave when first we practice to deceive.
— Walter Scott
The promise given was a necessity of the past. The word broken is a necessity of the present.
— Niccolo Machiavelli
Credits and Debits
Debit: Don’t look now, but financial analyst Dave Kranzler notes that: “The current non-mortgage personal interest burden is nearly 20% higher than it was just before the 2008 financial crisis — (and) roughly 75% higher than it was at the turn of the century.” Of course it is. But I’m sure there’s nothing to worry about. Financial statistics like that are perfectly normal in a thriving economy. Yep. The peak of fiscal health.
Debit: Meanwhile, Illinois politicians are looking at transferring public assets directly to state pensions. No, really. Yes, the plan sounds reasonable, but the asset transfers won’t solve anything because although those government pension funds might be made more secure, the Illinois government’s overall balance sheet will remain the same. So it’s all just an illusion … just not as slick as this:
Credit: According to one New York University professor, Illinois’ asset transfer scheme, as well as the governor’s plan to issue a $2 billion bond will never work — as if trying to borrow your way out of debt ever worked. “There’s going to have to be some actual sacrifice,” says the professor. Well … yeah. Just don’t tell that to Illinois’ government retirees and future-retirees; they seem to think the gravy train will never end.
Debit: Nevertheless, a new survey has found that two out of three Americans are worried about not having enough savings for retirement. And while only 3 in 10 American retirees say they’ve noticed a decline in their standard of living, Bloomberg warns that,”It’s entirely possible that government budget cuts, low saving rates, and weak market returns could make future retirees even worse off than seniors today.” Ya think?
Credit: As Charles Hugh Smith notes, “The Fed’s sudden return to dovishness in response to the stock market’s swoon telegraphs its intent to fire up QE. That sets up an obvious question: what happens when QE fails? What happens when the Fed launches QE and stocks fall as punters realize the rally is over, (and) when lowering interest rates doesn’t spark more borrowing?” Ooo, I know! Here’s a preview:
Debit: Oh, I hear ya: What about this modern monetary theory (MMT) that’s being hyped by today’s academics and pols? In short, MMT posits that a nation can’t go bankrupt as long as it borrows from itself. In other words, you really can have a free lunch! Heh. But what the MMT charlatans can’t refute is that MMT actually pays for that “free” lunch by slashing the dollar’s purchasing power, which reduces your standard of living.
Debit: Ironically, even the Fed recognizes the folly of MMT. Former Fed President Bill Dudley notes that, “MMT didn’t work out well for Germany in the 1920s; or Venezuela and Zimbabwe more recently. The US tried a milder version in the 1960s and 1970s. The result was inflation and America’s withdrawal from the gold standard.” True. Then again, Bill, since 1913 the Fed hasn’t worked out so well for the US either.
Credit: Of course, the Fed has done a fine job debauching the US dollar without the help of MMT, which is why Peter Schiff warned this week that the real national emergency isn’t the lack of a beefy barrier on the southern US border — instead, it’s America’s $22 trillion National Debt and $250 trillion in unfunded liabilities. And MMT is a desperate attempt by those with a vested interest to keep our dying corrupt debt-based system they depend on alive.
Credit: According to Bill Bonner, at some point: “All of these excesses and absurdities will be corrected; Mr. Market will take care of that. Then the leverage works in the other direction collapsing asset prices, credit, and the economy. That’s how the cycle goes. Elegantly. Effortlessly. Inevitably. An excess of animal spirits cured by a shortage of animal spirits. Too much credit cured by too little credit. And a bubble cured by a crash.”
Debit: It should be painfully obvious to anyone paying attention that Bonner is correct: Mr. Market will fix this. Only this time it’s going to take a global currency crisis to set things right. Unfortunately, for most people, that’s going to result in a significant reduction in their standard of living.
By the Numbers
For anyone who still cares, the 91st Academy Awards is scheduled for this coming Sunday. So here’s a few tidbits on the annual extravaganza:
$44,000,000 The total cost of the awards ceremony.
$24,700 The cost of the Oscar’s red carpet.
900 Hours required for workers to install the red carpet.
$2,600,000 The cost of a 30-second ad during the telecast.
$18,100,000 The cost of actress Cate Blanchett’s attire for the 2014 ceremony.
$150,000 The value of the gifts in this year’s Oscar goodie bag, presented to the show’s presenters and performers.
The Question of the Week
How would you characterize your home’s location?
Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.
Last Week’s Poll Results
What do you enjoy more?
- Saving money (70%)
- Spending money (19%)
- I’m not sure (11%)
More than 1500 Len Penzo dot Com readers responded to last week’s question, and 7 in 10 say they have more fun saving money to spending it. Are they crazy? Or crazy like a fox?
Useless News: Tax Return
The IRS returned a tax return after the taxpayer apparently answered one of the questions incorrectly. In response to question 23: “Do you have anyone dependent on you?” the taxpayer wrote: “2.1 million illegal immigrants, 1.1 million crack-heads, 4.4 million unemployable scroungers, 80,000 criminals in over 85 prisons, plus 650 idiots in Washington, and the entire group that call themselves politicians.”
On the returned form, someone at the IRS had attached a Post-it Note beside the question with an arrow and the words: “Your response to question 23 is unacceptable.”
The taxpayer sent it back to the IRS with his response on the bottom of the Post It Note: “Who did I leave out?”
(h/t: RD Blakeslee)
Other Useless News
Here are the top five articles viewed by my 25,214 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- 4 Habits and Systems the Wealthy Follow Religiously
- Why I Prefer a Spreadsheet to Track Expenses and Manage My Finances
- How to Fix Your Finances Without More Money
- 36 Amazing Uses for the Lowly Plastic Grocery Bag
- The 9 Biggest Home Repair Scams
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Letters, I Get Letters
Every week I feature the most interesting question or comment assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: [email protected]
After my article highlighting the top 40 ways to improve your credit score, Ken Thomas left this comment:
There’s an old saying that, “If you’re depressed, you’re living in the past. If you’re anxious, you’re living in the future. And if you’re at peace, you’re living in the present.”
Okay … but I’m hungry. So that old saying isn’t a lot of help right now.
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Photo Credit: spreadshirt.com