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?
The gold standard did not collapse – governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion had to be put into action in order to destroy it. Solemn pledges were broken, retroactive laws were promulgated, provisions of constitutions and bills of rights were openly defied. And hosts of servile writers praised what the governments had done, and hailed the dawn of the fiat-money millennium.
— Ludwig von Mises
Credits and Debits
Credit: Did you see this? Although US rental prices climbed faster than paychecks in the aftermath of the pandemic, renters have reclaimed some ground this year because, in much of the country, rents are falling. As of the end of October, the median monthly rent on units with up to two bedrooms have fallen 1.7% year-over-year to $1696. That’s also down 3.6% from their 2022 peak. Now for the bad news: That still doesn’t mean that rents are affordable for many Americans. If you’re looking for that, then you’ll need to live in China…
Debit: Rents may be falling, but people are still being cautious with their money. A new survey has found that many consumers are looking to shell out 4% less this holiday season than last year, citing higher costs of living and more fear of the economy. That is the first time since 2021 that shoppers have indicated that they plan to spend less than previous years. Consumers making less than $50,000 a year are expected to spend 12% less than last year, while shoppers making more than $200,000 a year say they’ll cut their spending by 18%. And while the latter seems counterintuitive, there may be a good reason for that…
Credit: In other news, just 1 in 5 Baby Boomers expect to leave an inheritance, with the rest planning to spend their wealth during their lifetimes instead. Factors contributing to this trend include the desire to enjoy their money, high costs of living, inflation, and significant expenses related to healthcare and long-term care in retirement. The punchline? This contrasts with many younger generations who expect to receive an inheritance… of some kind.
Debit: Frankly, who can blame any parent for not planning on leaving an inheritance to their kids when a cheeseburger at McDonald’s is now more than three times as expensive as it was in 2019 and a medium serving of French fries are more than $4? Or that a Big Mac that used to cost $2.25 in 2000 is more than $6 today in most of America, including Massachusetts where they sell on average for $6.75. And to think there was a time when McDonalds used to issue $5 holiday gift books with five $1 coupons in them. When we were kids, those holiday books were good for several trips to the Golden Arches. Clearly, not anymore.
McDonald’s circa 1975
Debit: It turns out that finances aren’t doing so well on the other side of the pond either, where a German federal official reported this week that, “Almost every German city is now on the verge of bankruptcy.” He went on to point out that the largest state in Germany has only 10 out of 396 cities and municipalities that can present a balanced budget. He then added that those alarming figures aren’t unique to that particular state and can be applied to the “entire country.” Sounds like Germany is finally running out of other people’s money. That’s just one reason why silver closed more than 5% higher to finish at a new all-time high ($56) on Friday.
Credit: Of course, the US is heading in the same direction as Germany, albeit at a slower pace thanks to a seemingly endless supply of other nations willing to buy its debt. However, as macro analyst Sunil Reddy points out, “For decades, the Fed could always buy unlimited quantities of US Treasuries, forcing yields lower and prices higher. But that privilege depended on two conditions that no longer exist: 1) Inflation anchored near 2%; and 2) The dollar’s unchallenged role as the global (reserve) currency – and both anchors are now gone.” True. And that’s bad news for most Americans. But honesty is always the best policy. Just ask these guys…
Credit: In response to the US fumbling away its exorbitant monetary privilege, several years ago China launched the BRICS-linked Cross-Border Interbank Payments System (CIPS) as an alternative for global trade settlement. The CIPS has now expanded across 185 countries, allowing international payments in Chinese yuan without using the US dollar (USD). If true, the USD’s role as the global king of currencies could finally be on its death bed. Or not…
Credit: Unlike the fraudulent fiat currency that everyone is forced to use today, gold has zero credit risk; the yellow metal can’t be printed, debauched, or defaulted on. On the other hand, the “Almighty US Dollar” (USD) isn’t money at all – it’s debt. And, unfortunately, as economist Daniel Lacalle points out, “the history of fiat currencies is always the same: first governments exceed their credit limits, then ignore all the warning signs and finally see the currency collapse.” Well… put a checkmark in the first two boxes.
Debit: Meanwhile, the US federal deficit last month alone was more than $285 billion – if that pace continues , the deficit for the entire 2026 fiscal year will be $3.4 TRILLION. With all that in mind, it should be no surprise that China is overtly buying gold as part of a de-dollarization strategy. While the official figures show that the Bank of China is holding 5500 tons of the yellow metal, many analysts say China is intentionally understating its true gold hoard by upwards of 20,000 tons, if not more. In other words, the official numbers are just an illusion…
Credit: By the way, gold accumulation by all of the world’s central banks has been a key driver of the yellow metal’s relentless surge that started several years ago, as policy makers have sought both a store of value and greater asset diversification. Despite this steady accumulation, JP Morgan investment strategist Alex Wolf notes that gold as part of “forex reserves is still relatively small as an overall percentage” for many central banks. As a result, he says “we still see them adding” to their current hoard, regardless of how high the price goes. Imagine that.
Credit: We’ll finish this roundup with a final observation from Mr. Reddy. He reminds us that, “When risk aversion spikes and leveraged positions are forcibly unwound, terrified money seeks the asset with the deepest liquidity, the least counterparty risk, and the strongest institutional bid. From the 1980s until very recently, that asset was unequivocally the US Treasury bond. Today that crown has passed, permanently, unless something fundamental about the global monetary system reverses — to gold.” Indeed it has. How much of the yellow metal do you have?
By the Numbers
This list of average price increases for some of McDonald’s most popular items from 2019 to 2025 illustrates how inflation has turned fast food into a very expensive luxury:
22% Cheeseburger (was: $1.00; now: $3.15)
63% Big Mac (was: $3.99; now: $6.50)
69% 10 pc. Chicken McNuggets (was: $4.49; now: $7.58)
134% Medium French Fries (was: $1.79; now: $4.19)
202% McChicken Sandwich (was: $1.29; now: $3.89)
Source: FoxNews
The Question of the Week