It’s time to sit back, relax, and enjoy a little coffee. Welcome to another lively edition of Black Coffee, your quirky weekly round-up of money and personal finance news. I hope everyone had a fantastic week. Let’s dive into this week’s commentary.
**Capitalism:** If you have two cows, you sell one and buy a bull.
**Socialism:** If you have two cows, the government takes one and gives it to your neighbor.
**Communism:** If you have two cows, the government takes both and gives you some milk.
**Credits and Debits**
**Debit:** Did you see this? Credit card debt for struggling Americans is at record levels, boosting the popularity of buy-now-pay-later (BNPL) programs. Last week, we discussed how many six-figure households plan to miss at least one BNPL payment next month. The kicker? BNPL credit isn’t tracked as part of the overall consumer debt calculation, meaning consumers are far deeper in debt than official figures indicate. How bad is it? Pretty bad.
**Debit:** Speaking of socialism, last year the Cuban government pushed its “cashless society” campaign hard, making credit cards or digital currency mandatory for buying food, fuel, and other essentials. Predictably, many Cuban businesses ignored this rule and demanded cash instead, making cash more precious than ever. This has led to a cash crunch. In 2018, 50% of all cash was held by Cuba’s productive working population and the other half by Cuban banks. By 2022, only 30% of available cash was in the banking system, likely even lower today.
**Debit:** If you believe the Cuban government, inflation was officially 77% in 2021 before falling to 31% last year. However, the public experiences much higher inflation, with prices on the street reaching triple digits. For example, a carton of eggs that sold for 300 Cuban pesos in 2019 now sells for about 3100 pesos. Keep in mind, those with government jobs earn 6000 Cuban pesos per month. But hey, they have “free” healthcare! Meanwhile, back in America…
**Debit:** Pivoting to the other side of the world, China and other BRICS countries have been offloading US treasuries since 2022. Last week, China sold a record $53 billion worth of US treasuries and agency debt bonds. Historically, this is the largest sell-off by China ever recorded. It seems the Middle Kingdom might be on to something…
**Credit:** China and the rest of the BRICS have known for some time what financial “experts” in the US haven’t. Goldman Sachs CEO David M. Solomon recently warned about America’s deficit spending, stating, “I think the level of debt and spending in the US is something that we need a sharper focus on.” The investment banking chief also warns that if spending isn’t controlled, it could create problems.
**Debit:** Massive deficits aren’t unique to the US. The global debt-to-GDP ratio is at an all-time high, with significant increases from countries like China, India, Brazil, and Mexico. It seems central banks around the world will need more regulatory signs for their printing presses.
**Credit:** Annual interest on our national debt is set to hit $1 trillion by year’s end. It’s obvious that the US is now monetizing its debt. As macro analyst Matthew Piepenburg observed, “the world is catching on to the fact that the American empire is spending more than it earns.” It’s sickening that Uncle Sam is paying its IOUs with debased US dollars created out of thin air. Yet, some still buy 30-year Treasury bonds that pay less than 4.5% annually.
**Debit:** History tells us that debt-laden nations try to save their currency by monetizing their debt, leading to inflation that harms the middle and lower classes. So, it’s no surprise that the US is doing this now. The media will likely claim that “nobody could see it coming” when the USD’s purchasing power eventually collapses.
**Credit:** So how did we get here? James Howard Kunstler pointed out that “a system based on credit is one thing, when credit can be paid back – but that system is gone. Our debts are not payable, and everyone knows it. Fugazi finance is hitting the wall.” Let’s revisit this classic from a not-so-long-ago time when the financial world’s mojo was still strong.
**Debit:** Kunstler also noted that rising gold and silver prices signal that the USD is in trouble. The consequences, whether it’s a bond market blow-up, raging inflation, bank failures, or a crash in the standard of living, are looming.
**Credit:** While it’s uncertain what consequences our debt-laden nation will face, there’s still time to protect your savings and purchasing power from a currency crisis with physical precious metals. Or, you can continue trusting the same ideologues who’ve managed a 98% decline in the USD’s purchasing power since 1913. The choice is yours.
**By the Numbers**
A new study analyzed over 40,000 Google reviews for nearly 7000 dealerships in 100 cities to determine the pushiest car dealerships in America. It turns out Volvo salesmen are the least pushy. Here are the 10 pushiest dealerships by car brand:
10. Honda
9. Dodge
8. Toyota
7. GMC
6. Nissan
5. Hyundai
4. Mazda
3. Chrysler
2. Kia
1. Fiat
**The Question of the Week**
How long do you typically drive your car before buying a replacement?
– 10 to 15 years (38%)
– More than 15 years (28%)
– 7 to 10 years (19%)
– 4 to 6 years (11%)
– Less than 4 years (4%)
**Last Week’s Poll Results**
French toast, pancakes, or waffles?
– Waffles (39%)
– French toast (32%)
– Pancakes (29%)
More than 1800 readers responded to last week’s question. When it comes to breakfast, almost 2 in 5 of you prefer waffles over French toast or pancakes. I prefer French toast, but waffles are a close second as they hold syrup better.
If you have a question you’d like to see featured here, please send it to me at Len@LenPenzo.com and put “Question of the Week” in the subject line.
**Useless News: Taxi Ride**
A woman and her 12-year-old son were riding in a taxi through a seedy part of town. It was raining, and all the prostitutes were standing under awnings.
“Mom,” said the boy, “what are those women doing?”
“They’re waiting for their husbands to get off work,” she replied.
The taxi driver turned around and said, “Lady, why don’t you tell him the truth? They’re hookers, boy! They have sex with men for money.”
The boy’s eyes widened, “Is that true, Mom?”
His mother, glaring at the driver, answered “Yes.”
After a few minutes, the boy asked, “Mom, if those women have babies, what happens to them?”
She replied, “Most of them become taxi drivers.”
**Buy Me a Coffee? Thank You So Much!**
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**More Useless News**
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**(The Best of) Letters, I Get Letters**
Every week, I feature the most interesting question or comment I receive. If you have a question, you can reach me at Len@LenPenzo.com.
After reading my article on finding a reputable low-cost pest control company, Gerri in Bangladesh shared this:
Me and my boyfriend moved into our new apartment and wanted to make sure there were no pests. Unfortunately, we found out it has fleas infested with the bubonic plague.
Call me a cynic, but something tells me you don’t really live in Bangladesh. Los Angeles, maybe; but Bangladesh? Nope.
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