It’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.
I’ve got another busy weekend ahead of me, so let’s get right to this week’s commentary …
Those pieces of fiat paper – which should have been gold – are a token of honor; your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle, which is the root of money.
– Ayn Rand
Credits and Debits
Credit: Did you see this? A recent op-ed piece in the New York Times laments the decline of airport lounges: long waits, sad buffets, and weak drinks that hardly justify the hype. Lounges used to be a perk reserved for business travelers, but now everybody is using them. As a result, there are long lines for access to what has become overcrowded gathering spots that do nothing to reduce stress, while offering substandard drinks and buffet fare. This is just more proof that when everyone is “special” then nobody is. Thankfully, airlines are quietly raising lounge costs in an attempt to bring back exclusivity and make lounges a place to relax with superb service.
h/t: Mint
Debit: On Friday, the government’s Bureau of Labor Statistics (BLS) reported that the US added a paltry 22,000 jobs in August. But that wasn’t the worst of it – the BLS also revised its June figures, which showed a net loss of 13,000 positions for the month. That’s the first net jobs loss for any month since 2020. Uh oh. The latest jobs data has pushed the odds of a September rate cut by the Fed to more than 95%. And speaking of odds…
Debit: On a related note, a new study by Stanford University found that workers who are just starting their careers between 22 and 25 face a disproportionate threat to job loss from the widespread adoption of generative artificial intelligence (AI). In fact, on average young workers have experienced a 13% decline in employment in job sectors that are most vulnerable to AI replacement, with software developers between 22 and 25 seeing a 20% decline. Then again, the outlook is even worse for telemarketers…
Debit: By the way, the same study also found that customer service representatives are also at risk from the significant proliferation of AI deployment. On the bright side, work for more experienced employees in the same sectors continued to grow. In the meantime…
Debit: On Wall Street, despite a down day on Friday, both the S&P and Nasdaq finished the week with gains, rising 0.3% and 1.1%, respectively. The Dow, however, saw losses on the week; it ended the week 0.3% lower. Unfortunately, it is patently obvious that market asset values have been irrevocably tied to the Fed’s printing press since the Great Financial Crisis – which is why the Fed will soon be cutting rates, despite ongoing inflation risks. In other words: ThE paRtY wiLL cOnTiNuE!!!
Credit: In other news, it looks like Florida may soon eliminate property taxes – and they’re not alone. The Sunshine State, along with Illinois, Kansas, Montana, Pennsylvania, and Texas are all trying to significantly cut or even abolish the property tax. According to Yale professor David Schleicher, the march to eliminate property taxes is “largely a response to the run-up in house prices, particularly in the suburbs and exurbs.” In reality, the movement is in response to the absurd run-up in property taxes. But point taken.
Debit: Meanwhile, British, German and Japanese long bonds all touched their highest yields in a decade – or even longer – this week. Translation: Yield curve control (YCC) is coming. It also means that the world is finally waking up to the fact that using central bank printing presses to pay for everything – including every financial crisis that rears its ugly head – eventually destroys the purchasing power of fiat currencies. As a result, any bonds denominated in those same fiat currencies are no longer being considered as monetary system safe havens. In fact, investors who are looking for safety today are buying gold. Imagine that.
Credit: Anyone who’s paying attention knows that our fraudulent debt-based monetary system has just about run its course. As James Howard Kunstler points out, the money men “are staring into the abyss staring back at them, with their hair on fire and their eyes bugging out. Just about everything is out of whack: stocks, bonds, the fun-house of shadow banking, collateral (if it’s even there), currencies, perhaps even the fate of nations. France, for instance, is chattering about an imminent IMF bailout. Well, if that one goes, what do you think happens in Germany, Britain, Italy, Spain, the Netherlands, and Belgium?” Yep. Exciting times for sure.
Depending on the perspective, what many people believe to be a “doom and gloom” scenario is seen by others as something to be embraced.
Credit: The US government added both copper and silver to its draft 2025 List of Critical Minerals last week. As sagacious metals analyst Franklin Sanders notes, “This puts silver in the same strategic category as lithium, uranium, and rare earth minerals. Within four years of receiving this designation, uranium climbed from $20 to over $100 a pound and lithium from $10,000 to $70,000 per metric ton. What do y’all think this will do to the price of silver over the next two years? Think triple digit silver.” Eventually. In the meantime …
Credit: On a related note, experts say that the US government is signaling that a gold revaluation may be coming sometime within the next 12 months. How high could the yellow metal actually be revalued to? Well… that depends on how low the US government wants its debt-to-GDP ratio to go, keeping in mind that any ratio over 90% is considered by economists to be both unhealthy and unsustainable. In any case, here’s a chart that sums the situation up nicely (don’t think the markets are sniffing this out)…
Source: GoldSilver.com
Credit: So … what price will the US ultimately revalue gold to? According to GoldSilver, gold would need to be revalued to $3981 per troy ounce just to lower the debt-to-GDP ratio a measely 3% – that is, from 119% to 116%. Alternatively, the US would have to revalue the yellow metal to $34,000 just to get debt-to-GDP to the maximum “sustainable” level of 90%. And it would take a gold revaluation to $86,000 to return America’s debt-to-GDP back to where it was i