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 a wonderful week. And with that, let’s get right to this week’s commentary, shall we?
There is a simple rule of life: Beyond a certain point, complexity is fraud. You can apply that rule to social programs – but you can also apply it to credit derivatives, hedge funds, and all the rest.
– PJ O’Rourke
Because gold is honest money, it is disliked by dishonest men.
– Ron Paul
Credits and Debits
Debit: Did you see this? It was already known that there are far more Social Security numbers that have been issued than Americans who have existed since the inception of the program. But the latest DOGE audit led by Elon Musk has uncovered this: More than 10 million people aged 120 or older are on record with the Social Security Administration as still being alive. No, really. The big question is: How many of them – or more appropriately, their grifting surrogates – are still officially collecting benefits? And the next biggest question: Who are the people who are going to complain about Elon uncovering all this fraud, waste and abuse anyway?
Credit: In other news, a man is raising the stakes in his years-long battle to get back the hard drive that contains a discarded bitcoin key worth somewhere around $800 million by offering to purchase a landfill in Great Britain in an effort to find the wallet before the dump is permanently closed. The man previously offered to fully fund the excavation process and share 25% of his gains with the city. Alas, the council wasn’t interested. No word on whether it was because they’d be looking for a needle in a haystack – or because their role as fiduciaries prohibits them from betting on highly-speculative assets of dubious value.
h/t: @elessarts
Credit: Maybe that fear of misplaced hard drive is why Fed chair Jerome Powell testified before Congress last Tuesday that the Fed will not develop its own digital currency as long as he is in charge. Wait … what? Then again, anyone who thinks CBDCs offer a realistic solution to America’s debt problem probably thinks this is based in reality too:
Credit: Let’s turn to the world of real money, where we see that the yellow metal has delivered impressive returns over the past 12 months. How impressive? Well … how’s 46% sound? That’s nearly double the S&P 500’s gains. Meanwhile, it’s still taking those in charge of the London gold vaults up to eight weeks to deliver the yellow metal to people wanting delivery. If we didn’t know any better, that sounds like the London gold vaults are empty – even though we’re being told there’s plenty of metal for everyone who wants it. Heh, riiiiiight …
Credit: Needless to say the S&P 500’s performance hasn’t been lacking; it’s up 57% in the last two years. However there’s a fly in the ointment: fully 75% of that gain can be attributed to the so-called Magnificent Seven which is comprised of the following companies: Alphabet (Google), Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. Quite frankly, those who are insisting that this is perfectly acceptable for a healthy market make about as much sense as a driving dog. Oh, wait …
Credit: The absurd size of the current stock market bubble has left Jim Quinn shaking his head. He notes that, “Mom and pop investor sentiment is now at an all-time high. Many of today’s addled attention-deficit investors have never experienced a real bear market. Margin debt is near an all-time high. The smart money is exiting, while billions are pouring into the market from the dumb money crowd. They’ve forgotten how they got fleeced in 2001 and 2008. Oh well. Maybe they’ll learn this time.” Maybe. But we sincerely doubt it, Jim.
Debit: While everyone loves rising stock prices – at least if they own them – nobody loves higher prices for everyday living expenses. With that in mind, US consumer prices – driven by rising shelter and food costs – jumped 0.5% in January, marking the sharpest monthly increase since August 2023. The good news is: Everybody’s credit cards still appear to be working. So there’s that.
Debit: Unfortunately, this stubbornly-persistent and rising inflation has set the stage for stagflation, an extremely painful economic condition marked by soaring inflation, stagnant economic growth, and rising unemployment. The last time the US experienced stagflation was during the 1970 shortly after the US dollar’s (USD) anchor to gold was severed, which led to rapid growth of the currency supply. That, in turn, decimated American living standards with debilitating price hikes for everyday living expenses, crippling energy crises, and disco music. But other than that, the 70s were a truly wonderful decade.
Credit: By the way, once stagflation takes root, it’s really hard to get rid of it. Kind of like the kudzu that now covers much of the eastern US. In fact, macro analyst Jesse Columbo warned this week that, “If stagflation returns, the Fed will find itself in a difficult predicament, as its ability to implement monetary stimulus will be constrained by high inflation.” As such, he expects the Fed will ultimately be forced to prioritize the economy over inflation control – although we fail to see the wisdom in that decision. After all, for most people higher prices leads to lower living standards whether you are employed or not. Not that the Fed really cares …
Credit: One solution gaining rapid credibility is the establishment of a new sovereign wealth fund (SWF) backed by gold. As macro-analyst Vince Lanci points out, “Revaluing gold and monetizing it via a SWF functioning as a debt retirement vehicle offers a path to debt reduction without sacrificing market stability. With a SWF, gold is r
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Author : Len Penzo