A K-shaped recovery.
The ‘rich’ on the upstroke…the ‘poor’ headed down.
The rich working remotely…the poor barely working at all.
The ‘rich’ in their suburbs, vacation homes, and Zoom towns…the poor struggling to pay their rent or mortgage…
The ‘rich’ enjoying their stock market gains…the poor waiting for their next cheque from the government.
The rich, fat, and sassy, ready to send in their ballots…the poor picking up rocks, ready for a revolution.
On Friday we looked at what has happened so far in the 21st century. Boom…bust…war…debt…disappointment.
But that took us only up to 2020.
This year, the disappointment intensified…with two of the most boneheaded decisions in government history crowded into the space of just 30 days.
First, the feds shut down the source of real wealth for 90% of the population — the Main Street economy. Then, they tried to use their quack medicine — fake money — to revive it.
But this time, they didn’t merely give the magic elixir to Wall Street, hoping some of it would dribble off its chin into the real economy.
This time, they gave money directly to Main Street, too.
The trouble is, while counterfeit money (with no real wealth behind it) works for Wall Street, it doesn’t work for Main Street. The latest unemployment numbers — even the official ones — show new jobs lagging. Here’s The New York Times:
‘Despite some signs of economic revival, the outlook for American workers remains treacherous, with layoffs continuing to claim hundreds of thousands of jobs a week.
‘The weekly figures on unemployment claims from the Labor Department on Thursday showed no relief, reflecting what Michael Gapen, chief U.S. economist at ‘Barclays, said was “a transition to a slower pace of recovery, and one that will be more uneven.”
‘The department reported that more than 857,000 workers filed new claims for state unemployment insurance last week, before seasonal adjustments, a slight increase from the previous week. On a seasonally adjusted basis, the total was 884,000, unchanged from the revised figure for the previous week.’
You may say that is ‘only because of the virus’. But it seems to be more than that. Attitudes have changed. Habits too.
From our office in Baltimore comes this update:
‘We’re downsizing. We now only need half as much space. We found that we could work perfectly well remotely. Now, the office is open, but only a few people are coming here to work. The rest work from home. All we really need are a few offices and a few meeting rooms.’
This is great news. It means we can save on office space, cutting our rental costs in half.
But what about the landlords? What about property prices?
Manipulate and control
Meanwhile, from New York comes news that restaurants will be allowed to open for indoor dining next week — but only at one quarter capacity.
Let’s see…how does that work? How many restaurants can survive high New York rents with only a quarter of the customers?
Like Sweden, now that the virus has cut through the empire state, the number of new COVID-related deaths has dropped to the floor. In New York restaurants today, you are more likely to die by choking on a piece of meat than from catching the coronavirus.
But the politicos/world improvers have found a new way to manipulate and control the masses. We doubt they’ll give it up easily.
In airports, travellers still submit to screening and pat downs — 19 years to the day after the 9/11 attack. Now, to enter a restaurant in Manhattan, they will have their temperature taken. Will restaurant owners still be checking diners’ temperatures in 2039?
And don’t expect a ‘deus ex vaccine’ to suddenly return things to normal. No vaccine for a coronavirus has ever been proven effective. And even if one is eventually developed, it won’t be widely employed any time soon.
Meanwhile, people are getting used to a new economy — one where they depend more heavily than ever before on the government…not just to tell them what to do, but to give them money.
That is what marks a big step down in US’ descent. The Federal Reserve can support Wall Street; the ‘benefit’ is immediate and unmistakable. The harm, on the other hand, is long-term and almost invisible.
As we’ve seen over and over, the fake money raises asset prices and makes investors happy. It also shifts their attention from long-term, productive investment — new factories, new products, new employees — to short-term money hustles.
Share buybacks, mergers and acquisitions, and borrowing money to fund bonuses and dividends — all provide quick gains for investors, but no real benefit to the economy.
As a result, GDP growth rates have been falling for the last 50 years. In the first three years of the Trump administration, they averaged only half what they had been in the 1970s and 1980s. This year, they are negative.
And now, the feds are giving the same scammy treatment to Main Street that they’ve been giving to Wall Street for decades.
But what happens when you give money to the 90% of people who don’t own stocks? What do you get? Do you make them all richer? Richer than whom?
Ah…there’s the flimflam. Counterfeit money never adds to a nation’s wealth; it merely moves it around.
The investor is ‘richer’ when he can cash in his stocks and buy more goods and services in the Main Street economy. He’s ‘richer’ than the 90% without financial assets.
But who will the 90% be richer than? From whom will they buy real goods and services? Only themselves.
What you get when you try to ‘stimulate’ the Main Street economy is more people with more money bidding against each other.
Again, this is no problem on Wall Street. Prices go up; everybody’s happy.
But when it happens on Main Street, it’s a whole ‘nuther thing.
More to come…
For The Rum Rebellion