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Black Coffee: The Monster Under the Bed

black coffeeIt’s time to sit back, relax and enjoy a little joe …

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?

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

— John Maynard Keynes

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.

— Alan Greenspan

Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.

— Sam Ewing

Credits and Debits

Debit: On August 13, 1979, Businessweek published a cover story entitled “The Death Of Equities.” Not long after, the 40-year secular bull market in stocks began. Many analysts consider those magazine cover stories to be contrarian indicators; the logic being that, by the time a trend has gained enough attention to warrant a cover story, the financial worm is ready to turn. And this week, Bloomberg came out with this:

Debit: In their story, Bloomberg asks, “Did inflation perish of natural causes; a weak economy? Was it killed by central banks with high interest rates? Or is it not dead at all, soon to return with a vengeance?” The magazine editors suggest their answer by depicting inflation as a dead dinosaur on its cover. Ironically, here in the real world, most people understand that inflation actually looks more like this:

Debit: But, seriously … It’s enough to make you wonder if these editors ever shop for groceries, pay rent, go to the doctor, or have kids in college. They obviously haven’t bought a home lately either — despite last month experiencing the first year-over-year decrease in US home prices since February 2012. I know … but it’s still never been a better time to buy a house! At least that’s what all of the realtors keep saying. Heh.

Credit: Anyone who insists that inflation is running at less than 2% annually — as the government’s highly flawed CPI figure suggests — should have their examined. The Chapwood Index, which reports the unadjusted actual price fluctuations of the top 500 items Americans buy in the 50 largest US cities, currently shows double-digit inflation raging in 21 of those 50 metropoles. But, yeah … inflation is dead, folks.

Credit: By the way, you can also see inflation in the stock market, which saw both the S&P 500 and Nasdaq Composite indices hit new all-time highs this week. Hey … who knows? Maybe trees truly can grow to the sky.

Credit: Speaking of inflating markets, after seeing its stock price skyrocket more than 5% on Thursday, Microsoft’s market capitalization surpassed the $1 trillion mark. The company joins Apple and Amazon as the only members of the trillion-dollar club. For now. Then again, if trees don’t grow to the sky, it’s possible there will come a day in the near future when nobody will be in the club.

Debit: Of course, the world’s central banks will continue propping the markets because, if they ever lose their lofty valuations, there’ll be unacceptable collateral damage. For example, it’s why the Bank of Japan is not only the top shareholder now in 23 companies, but it’s also among the top 10 holders for fully half of all Tokyo-listed enterprises — and they’re on pace to own almost all of them in under three years. No, really.

Debit: One sure victim of collateral damage from potential falling asset prices are woefully underfunded US government pensions. Consider Chicago: In 2005 there were only 1.4 active government employees for every retired pensioner; today, there are just 1.05. And if the trend continues, in less than two years there will be more pensioners draining cash from Chicago’s pension funds than active workers putting money in.

Debit: But wait; Chicago’s plight is only getting worse. The city’s population has been in a steady decline since 2014, which means its massive pension debts are falling on a smaller base of taxpayers. Needless to say, most people can see in advance exactly how the Chicago pension story is going to eventually end … but for those who aren’t sure, let’s go to the tape:

Credit: On a related note, a recent survey found that 80% of millennials worry Social Security won’t be there for them when they retire. When you consider the government already admits that, if nothing changes, the Social Security fund will be broke by 2034 — if not sooner — then I’d say those millennials know what they’re talking about.

Debit: Amazingly, despite Americans’ fears over Social Security, 23% of US workers admit that they don’t save a cent from their paychecks. Zip. Zero. Nada. How can that be? Well … 13% blame student loan debt, and another 13% blame credit card debt. Curiously, 0.0% blamed their inability — or unwillingness — to save even one lowly dollar per week on misguided personal priorities. Imagine that.

Credit: Here’s the bottom line, folks: If you’re relying on the government for your financial security in retirement, it’s time to stop. Now. Because the math makes it perfectly clear that the only entity you can count on regarding your future financial security — especially in your golden years — is you.

The Question of the Week

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 is the best age for a person to get their first credit card?

  • 21 or older (49%)
  • 18 to 20 (31%)
  • 17 or younger (10%)
  • Never (10%)

More than 1500 Len Penzo dot Com readers responded to last week’s question and it turns out that 1 in 10 of them believe that the best time for people to get their first credit card is before they reach the age of majority. On the other hand, another 1 in 10 think the best course of action is to never get a credit card. Although I disagree with that sentiment, when it comes to the best age for getting your first credit card, I’m not sure there is a right answer; it really depends on a person’s ability to responsibly handle plastic.

If you have a question you’d like me to ask the readers here, send it to me at [email protected] — and be sure to put “Question of the Week” in the subject line.

By the Numbers

Former MLB star Eric Byrnes played 420 holes of golf in 24 hours this past Monday and Tuesday at Half Moon Bay Golf Links in California. Here is a breakdown of his world record performance:

14,367 Calories burned.

106 Miles walked.

24 Pars.

2 Birdies.

116 The score of his lowest round. (Round #8)

168 The score of his highest round. (Round #23)

1 Clubs used. (An 8-iron.)

$50,000 Amount Byrnes’ golfing marathon earned for charity.

Source: Golfweek

Useless News: Cocktails for Three

Three blonde party girls sat down at the bar in a tavern. The first blonde tells the bartender, “I’ll have a BM, please.”

Puzzled, the bartender asked, “A what?

To which the first blonde replied, “A Bloody Mary! Duh!”

Then the second blonde told the bartender, “I’ll have a JC.”

Again, the bartender was stumped, so he asked, “What is a JC?”

The second blonde smacked her lips and then responded, “Duh! It’s a Jack Daniels & Coke!”

Finally, the third blonde, asked the bartender for something called a “Fifteen.”

Of course, the bartender never heard of that drink either, so he said, “Okay … you stumped me again. What on Earth is a 15?”

Shaking her head in disappointment, the third blonde replied: “Well, duhhhh! It’s a Seven & Seven!”

(h/t: Salamander)

Other Useless News

Here are the top five articles viewed by my 25,643 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):

  1. The 5 Most Misleading Grocery Items Shoppers Waste Money On
  2. The 10 Best Things I Ever Bought
  3. How to Teach Your Kids to Be Personal Finance Losers (in 6 Easy Steps)
  4. $10,000 Richer, a Georgia Teacher Shows Why It Pays to Read the Fine Print
  5. 9 Crazy Tax Deductions that the IRS Eventually Accepted

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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 reading a recent Len Penzo dot Com post that shared some clever ways to save money on pet care, Deb left an important tip of her own:

I would add: Never feed your small dog any fatty people food.

Good point, Deb. And don’t feed them fatty people either.

If you enjoyed this, please forward it to your friends and family. I’m Len Penzo and I approved this message.

Photo Credit: brendan-c

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