The death of George Floyd on May 25 due to his encounter with the police is a tragedy and people are angry. Anger has already been boiling below the surface — but there is anger about much more than race issues. Underneath, there are socioeconomic issues; affordability issues.
There is never a good time for a death at the hands of the police such as in the case of George Floyd; but arguably this was the worst possible time in the last hundred years that it could’ve happened. People have been stuck inside their homes, many leaving only to get the necessities like food, and if they could find it, toilet paper.
People are extremely stressed about not being able to work, having little to no savings, and no income coming in, along with the uncertainty of whether they will have a job or not in the next few weeks.
We already know that most Americans cannot afford a surprise bill of $400. What you should also know is that America is already facing an affordability crisis — it’s not just you. This goes well beyond not being able to afford an unexpected expense — this is about affording something remotely resembling a normal, everyday life.
People are broke, period. Poverty transcends race.
Right now things like health insurance, life insurance, and college savings funds are a distant dream to families buying generic cereal with barely enough milk for their kids to share.
Without some major correction in economic costs, even without the COVID-19 shutdowns and all of this unemployment, America was already facing protests over unemployment, hunger, housing issues, and more in the not-too-distant future. Now that timeframe has compressed significantly — and the protests for George Floyd were a reminder to all struggling Americans of their right to assemble.
There is already pent up anger not only among minorities, but the lower class and quite frankly, now much of the middle class too — who justifiably feel that the ‘system is rigged’. Every year we see the headlines — most of the economic gains are going to the top.
How far does it need to go? Do we need to get to the point where ten people own 90% of everything? That is, quite literally, the trajectory we are on. It is unsustainable.
The US government has either been so reluctant, or so out of touch, that they don’t seem to have any real willingness, or any idea what it would actually take to get the US economy back to a place of stability. It would take more than a full replacement of the income lost for any possible net economic gain — even if everyone had retained their jobs.
Think about that. The Government is not willing to do that.
Even if you feel it’s not the Federal Government’s job but, rather each state or city, realize that these municipalities are losing significant tax income due to everything that’s happened — most simply wouldn’t be able to afford to address such monumental needs.
After 2008’s Great Recession, the poverty rate in America increased nearly 30% within five years. Although this figure finally started to abate after 2013 when some began to get on their feet, what we are facing after this pandemic and shutdown, with its massive job losses, is something much more serious.
We do not have 10 years — which is how long it took to snap out of the Great Depression. It also took the demand of a war effort, and a tremendous number of social programs with both the New Deal under FDR, and later the Fair Deal under President Truman, to actually get Americans to a good place. What followed between 1945 and 1975 was the most sustained economic growth, and arguably, the best and most egalitarian years that the American economy has ever seen.
We became financially secure enough to begin to deal with Civil Rights. Now the cost of living has gotten such that we’ve seemingly gone backwards, erasing many of those gains, and we need to rebuild the foundation.
Instead, the government is just throwing $1,200 at the problems of people on ‘Main Street’ and somehow hoping they don’t protest.
As of June 1, the majority of moratoriums on evictions in the US have ended. Eviction court cases have already been piling up — as in many states, the documents were still able to be filed in the interim.
People are getting kicked out of their homes right now as you read this.
If none of this sounds like the America you live in, why don’t you go out on your quiet street and knock on the doors of some of those neighbors you rarely speak with — you’ll likely find at least a few that are facing significant financial issues in the coming months if something doesn’t happen for them. Greed and acquisition will not spare the remaining Middle Class.
The protesting and rioting that we have seen in recent days over George Floyd are unfortunately just a preview of things to come if the US government doesn’t ultimately do one of two things:
1 — Provide a tremendous amount of both fiscal relief, and a new floor of stability via social programs; or
2 — Actually start restoring the value of the US Dollar — which has been substantially devalued over the years.
The underlying issue that few seem to talk about is the cost of living itself — and continual increases are not a foregone conclusion. The price increases we regularly see are not specifically an effect of products and services costing more to produce and provide — they are also the effect of planned inflation — planned by the Fed and central banks because it helps both the government and the wealthy to “inflate away their debts”. See, when future money is worth less, it is like paying back less money on a loan. It’s a simple as that.
No wonder we’re all brainwashed to think that deflation is some terrible thing that ‘must not happen’. It can be bad, yes — but there is such a thing as helpful deflation.
And so the conundrum we face is that without a US economy that can suddenly start producing a great deal more than we have been, the option of having the Fed and government create a ton of money to cover such programs as would be needed, unfortunately, is ultimately very likely to result in inflation, which is counterproductive in the long run. Making costs even more expensive is the last thing we need.
There should be serious consideration of forgiveness of debts — because canceling out debts actually removes money from the money supply, which serves to restore the value of the US Dollar.
I don’t think any of us care whether restoring the value of the dollar happens via interest rate increases and deflation, reducing the number of dollars in circulation, or deciding to go back to a gold standard. It doesn’t matter — so long as something significant happens in the very near future.
We need to think differently — we can’t simply spend money into the quadrillions — and it is absolutely ridiculous that costs have gotten so high — because of our devalued dollar — that anything could possibly cost that much.
Either way, something must be done very soon — because the unrest is on its way, and another $1,200 isn’t going to stop it. Ultimately the targets are going to be the very same they had been after the Great Depression:
Wall Street, the banks, and the US Government.
Stay tuned, and stay safe.
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