It’s time to kick back, relax, and savor a cup of coffee. Welcome to another exciting edition of Black Coffee, your quirky weekly roundup of the latest happenings in the world of money and personal finance.
I’ve got a busy weekend coming up, so let’s dive into this week’s commentary.
The rich invest in assets, the poor only have expenses, and the middle class buys liabilities they believe are assets.
Credits and Debits
Credit: Did you hear about this? Last month, a woman won $50,000 in the Powerball lottery by using numbers from a fortune cookie. While it’s not a multi-million dollar jackpot, it’s still a nice sum. However, after taxes, she might only have enough left for a few meals at her favorite Chinese restaurant.
Debit: Speaking of restaurants, a new study shows that fast food has become a luxury for 78% of Americans. Even households earning over $100,000 are cutting back, with 52% eating less fast food, which might actually be beneficial for their health.
Debit: The same survey found that 44% of Americans have been asked to tip on fast food in the past six months, and 43% of those asked refused to add gratuity. Maybe it’s just us, but that seems like a low figure.
Debit: During the early pandemic, low interest rates boosted housing sales and remodeling projects. Now, with high borrowing costs, Americans are delaying home renovations and opting for more affordable options. Home Depot reported a 6.5% drop in big-ticket transactions, and Lowe’s saw a 6.2% decline in sales last quarter.
Debit: The elites managing our debt-based monetary system will protect their wealth at all costs. The Fed injected trillions into the system to support financial assets, pushing stock markets to near all-time highs. The wealthiest 10% of Americans own 93% of all stocks, while the bottom 50% hold just 1%. Does anyone else see a problem here?
Credit: Stocks aren’t the only forms of wealth. Including all assets, the bottom 50% of the US population still owns just 2.6% of all wealth.
Credit: A recession might be looming, according to Nancy Lazar of Piper Sandler. She notes that 19 US states have seen at least a 0.5 percentage point rise in unemployment rates, a historical recession indicator. She blames the economic downturn on delayed impacts of the Fed’s interest-rate hikes and tightening credit.
Debit: Lazar also pointed out that recessions typically occur ten quarters after the Fed begins a rate-hike cycle, but can take up to 16 quarters. The first hike of this cycle was in March 2022, meaning eight quarters have already passed. The official definition of a recession has changed, making it easier to dismiss economic troubles.
Debit: The question of economic well-being may depend on home ownership. Renters are struggling more, while homeowners benefit from refinancing during the pandemic. Home prices in America’s 20 largest cities rose for the 13th consecutive month in March, up 7.4% from last year – the fastest appreciation since October 2022.
Credit: The US House of Representatives passed a bill last week barring the Fed from issuing a central bank digital currency (CBDC) without explicit authorization from Congress. Meanwhile, global central banks are buying gold rapidly and moving away from the US dollar.
Debit: Maxine Waters argued against banning CBDCs, claiming it threatens the US dollar’s primacy and stifles innovation. She also claimed that CBDCs wouldn’t compromise privacy. Her statements highlight the need for IQ tests for congressional candidates.
Credit: The only currency that can be implicitly trusted is gold. Central banks have been quietly purchasing gold, signaling a shift away from the US dollar towards gold as the world’s primary reserve asset.
By the Numbers
A survey about consumers’ relationship with fast food also asked which chain they considered the most high-end among the top ten US chains by sales. Here are the results:
1% Dunkin Donuts
2% Domino’s
2% Burger King
3% Taco Bell
4% Subway
5% Wendy’s
16% McDonald’s
21% Chipotle
22% Starbucks
25% Chick-fil-A
The Question of the Week
Should all prices be rounded to the nearest nickel?
No (51%)
Yes (41%)
I’m not sure (7%)
Total Voters: 1,882
Last Week’s Poll Results
How long do you typically drive your car before buying a replacement?
10 to 15 years (36%)
More than 15 years (29%)
7 to 10 years (20%)
4 to 6 years (11%)
Less than 4 years (4%)
More than 1800 Len Penzo dot Com readers responded to last week’s question. It turns out that 2 in 3 of you drive a car for at least 10 years before getting a new or newer used vehicle. My current vehicle is 11 years old, and I plan on keeping it for at least another nine years, if not longer.
Useless News: Psych Test
During a visit to the mental asylum, a visitor asked the director how they determine if a patient should be institutionalized.
The director explained that they fill up a bathtub and ask the patient to empty it using a teaspoon, a teacup, or a bucket.
The visitor chuckled, saying a normal person would choose the bucket as it’s larger. The director replied, “No, a normal person would pull the plug.”
If you enjoyed this edition of Black Coffee and found it informative, please share it with your friends and family. Thank you!
I’m Len Penzo, and I approved this message.