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 hope everybody had an enjoyable week. Without further ado, let’s get right to this week’s commentary …
Courage is willingness to take the risk once you know the odds.
– Daniel Kahneman
Credits and Debits
Debit: Did you see this? A new consumer study has found that the average American spends nearly $1900 a year on subscriptions. Now for the punchline: The average American has so many subscriptions that they can’t keep up with them. So much so that they underestimated their monthly subscription spending by nearly $52 per month. (For those who averaged less than a C in math, that’s almost $624 per year.) Ouch. The good news is they can get some of that back with a little savvy shopping elsewhere …
h/t: Reddit (u/Not_a_Cardboard_Box)
Debit: In other news … a new study of more than 1500 adult American adults aged 18 to 40 who still live with their parents discovered that more than half (52%) actually receive a monthly allowance from parents. In fact, 31% of those adults admit to receiving a monthly allowance of more than $200. Even more astounding is that another similar study found that more than half of all adult kids are receiving a monthly allowance of $1500. Yikes. Fingers crossed that our adult kids don’t know about this. That being said, we suspect it’s probably too late…
Debit: We wonder how many of those parents who are still doling out an allowance to their adult kids are aware that, since February of this year, Americans born in the US have gained approximately 1.25 million jobs, while foreign-born workers have seen a net loss of nearly 200,000 jobs. This reverses a trend since 2021 of foreign-born workers gaining more jobs than US-born citizens. And on a related note …
Credit: Meanwhile, on Wall Street, stocks closed the end of the week on a down note after hostilities in the Middle East broke out; Friday’s losses were big enough to wipe out the major indices’ gains accrued through Thursday. For the week, the S&P 500 finished 0.4% lower, the Nasdaq shed 0.6%, and the Dow was down 1.3%. As for those of you looking for the perfect portfolio mix, well… Vanguard has turned the popular 60/40 stock-to-bonds ratio on its head:
h/t: demystifyingmarkets.com
Credit: Now over to Washington DC, where macro analyst Jessie Columbo points out that, “Since late 2023, the US M2 money supply has resumed its upward trajectory, expanding by $1.2 trillion. This renewed surge is one of the key drivers behind gold’s powerful bull market during that time. It also underscores a broader truth: the long-term direction of the money supply is relentlessly upward, with pullbacks being both rare and short-lived.” Yes; that’s extremely alarming. On the other hand, they’ve got to pay for all that government spending some how.
h/t: Jesse Columbo
Debit: Of course, there’s are costs for conjuring all of those “free” US dollars (USD) out of thin air. One of the biggest is the interest payments. And it’s only going to get worse from here as the federal debt is now firmly entrenched in the business portion of a very frightening exponential curve. The only saving grace is that the US government debt is “backed” by more than 8000 tons of gold to ensure global creditors’ continued faith in the currency – so it’s good for it. Or so they say …
(h/t: KingWorldNews)
Credit: Unfortunately, macro analyst Doug Casey points out that “the deficits are going to rise from $2 trillion to $3 trillion. And when the economy takes a downward turn, the government’s tax revenues will fall as its obligations rise.” Even worse, Mr. Casey says expects the US will have annual deficits approaching $6 trillion by the end of this decade. If he’s right, he says “bonds are in a world of trouble.” Frankly, we find it to be a complete mystery as to how the system has continued to function with even $1 trillion deficits – although maybe not as mysterious as this:
Credit: Speaking of deficits, Sprott market strategist Paul Wong reiterated this week that, “The foundation on which the USD has built its dominance as the world’s reserve currency for the last 80 years is shifting, undermined by America’s rising fiscal deficits and the current administration’s erratic trade policies.” Uh huh. Now you know why gold has surged from around $2100 to $3400 in a little more than a year – for those not counting at home, that’s a remarkable 62% gain. And if you think that’s impressive, then get a load of this:
Credit: What’s truly undeniable is the fact that even America’s allies are now quietly diversifying away from USD assets. In fact, in an interview last week the CEO of JP Morgan, Jamie Dimon, openly admitted that “a global restructuring” of the current debt-based USD-centric monetary system is well underway. Wait … what? You know… as little as several years ago, no businessman or mainstream economist wanting to be accused of wearing a tin foil hate would ever be caught making such a provocative comment like that – especially not in public. Then again, they wouldn’t have been caught making a statement like this either …
h/t: @leadlagreport
Credit: By the way, macro analyst Greg Mannarino astutely points out that when Mr. Dimon made his surprising statement, “he didn’t say ‘might have,’ or ‘may have,’ or ‘could have’ – he said ‘will have.’ Which is a polite way of saying: ‘We’re about to shut down the old system. The future is in place; now we just have to wait for the trigger.’ He’s admitting this debt-based system is done. It’s also a direct acknowledgment of the endgame and that they’re moving chess pieces into checkmate position.” Indeed. It’s a keen observation. Just don’t tell that to the always-optimistic fiat currency fans out there – despite the obviously long odds they now face. You know the type…
Credit: Maybe that’s why legislation was introduced in the House last week by Thomas Massie. The measure – dubbed the “Gold Reserve Transparency Act” – would create an audit of the gold held at Fort Knox, West Point, the Denver Mint and any other sites where America’s monetary metal is supposed to be stored. Unfortunately, the odds are good that his bill is dead-on-arrival. Even so, that shouldn’t be an excuse to avoid holding a little wealth insurance.
Len PenzoSource