As we all know, 2020 was a rocky year, with the onset of COVID-19 causing a wide range of problems. This has continued into 2021 and shows no signs of stopping.
While we may be actually crawling our way out from under the COVID pandemic, we’re just starting to see the impact that it has had on our nation; specifically, the impact that it has had on our economy.
There’s no question that the pandemic took a severe hit on our economy. On top of that, Congress has gone on a spending spree, with their “COVID stimulus packages” which have been filled with spending for pork projects. But that’s only a portion of what COVID is ultimately going to cost the country.
As we claw our way out of this pandemic, we’re just beginning to see the overall cost. One pair of Harvard economists has estimated that the total price tag for the pandemic will be over 16 trillion dollars for the United States alone; and that’s if we’re back to normal by the fall of 2021, just a few short months away.
There has already been too much finger pointing that has happened about this crisis and I don’t want to add to it. But there’s plenty of room to question whether decisions which were made solely to protect us from the disease were the best possible decisions.
Of course, like everyone else, I’m looking from the advantage of hindsight, unlike our government officials, who had to make their decisions in real time, based upon incomplete data, as the medical community was still trying to understand the disease.
I have been reminded over and over again about a famous quote of Benjamin Franklin. He said, “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty or Safety.” Yet throughout the pandemic, it seems to me that we have been collectively forced to give up our liberty throughout the pandemic, in a somewhat vain search for security.
I’m not talking about wearing masks, social distancing or not shaking hands; I’m talking about the millions of people whose finances have been destroyed, especially the small business owners whose doors were shuttered by government fiat, many of them permanently.
Those people lost their life’s work and savings, all for the purpose of trying to make others feel safe and the government “help” for small businesses did nothing to help those business owners, just to help their employees. Yet I don’t see where Wal-Mart was forced to suffer by government edict.
So just where does this leave us? Simply put, it leaves our nation in severe financial danger.
Financial gurus have been saying that a collapse is coming for several years now, and it seems like we are on the brink of it happening. It’s like that famous house of cards, where the key card has been removed and we’re all waiting for a puff of wind to knock it down.
Government Spending Out of Control
Probably the biggest thing that’s leading us into financial collapse is government spending.
As the government mandates lockdowns spread across the country and around the world, over 40 million American workers were sent home to wait out the pandemic.
Many of those were temporary furloughs, so they aren’t counted amongst the unemployed; yet they still weren’t gainfully employed.
In response to that, Congress passed several “Coronavirus relief bills” totaling somewhere north of 4 trillion dollars. That money was supposed to help people make it through the hard times, with some going out in stimulus checks and even more going out in small business loans and unemployment bonuses.
Yet for some of those who were out of work, it wasn’t enough to make ends meet. On the other hand, there were those who made more sitting home on unemployment, than they did working.
So where did all this money come from? We may as well say that it came out of thin air. The Federal Reserve bank loaned it to the federal government, creating it by buying the debt. If anyone else but the Fed had done that, they would have gone to jail for fraud.
They Don’t See the Problem
This has taught Congress that they can spend money with impunity. President Biden’s six trillion dollar budget proposal and Congress’ two trillion dollar plus infrastructure bill show this clearly. Once they broke that trillion dollar ceiling during the pandemic, they realized they could just keep spending, without repercussions.
Somehow, a group of economists have come up with the idea that our nation can sustain a much higher level of debt than previously realized. This idea has clearly been bought into by those currently in power and they are planning on spending every dollar of the new “credit limit” they can.
At the same time, the economic recovery that we were seeing towards the end of 2020 has stagnated, as investors have lost confidence in the economy. People are spending the money they saved during the lockdown, and the president is pointing to that as a sign of economic recovery.
But it’s clear that what’s happening is a temporary surge, and nothing more. Long-term economic indicators are not looking as good as the short-term ones that they’re touting do.
One of the more dangerous economic indicators we’re seeing right now is rising inflation.
For over a decade now, inflation has hovered around one percent or less. Yet in the first few months of 2021, we are looking at an “official” annualized rate of over 4.2% (as of April 2021), with that number jumping up by more than 1.5% from March to April alone. Chances are pretty good that it will climb much higher than that before the year is out.
Leading the way are increased costs in housing, fuel, food and lumber. New house prices are up over $30,000 from last year, due to lumber shortages. As that is probably a temporary spike, those who buy houses at that inflated rate will probably lose money, just as those who lost their homes in the 2008/2009 crash.
At least part of the rise in gasoline costs can be attributed directly to policy decisions being made by the president. In the last four years, we’ve gone from being a net importer of petroleum to a net exporter.
That has come to an end, as the new president has reversed many of the policies put forth by the previous one; and he has done so without any apparent concern about what those decisions will do to the economy.
The Loss of Main Street
I’ve already mentioned the devastating impact that COVID has had on small businesses. Figures are sketchy and aren’t by any means finalized, as can be seen by the fact that nobody can agree on just how many businesses have failed.
I can find figures which range all the way from 100,000 to 9 million, making it basically impossible to find the truth in those numbers. The small business relief the government offered went largely to larger, well established businesses, rather than the mom and pop shops that you and I think of, when we hear the term “small business.”
Even then, the only way of receiving loan forgiveness on those loans was to use at least 75% of it to pay the wages of people who weren’t working. It didn’t help those mom and pop shops pay the rent, keep the lights on or even pay themselves.
With little to no reserves, many were forced to shut down permanently; but they don’t get added to the statistics, because there are no bankruptcy proceedings for government statisticians to count.
Those mom and pop shops weren’t the only ones to suffer though. One list (which was written in the fall of 2020) shows 53 major retail corporations which have filed for bankruptcy due to COVID-19.
Granted, some of these companies were in bad financial straits before the pandemic hit; but that doesn’t take away from the fact that the loss of business during 2020 was enough to put them under.
Unemployment Remains too High
The two prime indicators of financial collapse are high inflation and high unemployment. Yet, after historically low unemployment before COVID hit, we are not seeing people go back to work as quickly as they should, now that businesses are reopening after the lockdown restrictions have been lifted.
Part of this is because the businesses that those people worked for just plain don’t exist anymore. It’s hard to go back to work at a company which has been forced to shut the doors. But much of it is because government policy is encouraging people to stay home.
With the Coronavirus bonus attached to unemployment, there are many retail and food service workers who are making more money watching daytime television, than they made working at their jobs.
“Official” unemployment stands at 9.7 million as of this writing. But that number is a bit misleading. In reality, there are over 16 million people out of work. But the official number is somewhere over 16 million. The discrepancy is that the official figure covers only those who are on unemployment.
On top of that, we face a national skills crisis that is only getting worse. Before COVID hit, there were six million jobs remaining unfilled for skilled workers. But there weren’t the skilled workers available to fill those jobs. That’s because by and large people weren’t learning those skills.
The current philosophy that everyone should go to college and get a degree is producing a lot of people with unmarketable degrees in fields where there are minimal jobs and steering people away from learning skills which will land them a stolid, well paying, blue collar career.
Anti-Business Government Policies are in Effect
The two major political parties have very different philosophies about business and job creation. Republicans are largely supportive of business, while Democrats have the idea that jobs come from the government. They aren’t as concerned about business, other than to see it as a source of tax revenue.
A number of Democrat politicians have publically stated that businesses making a profit are “greedy” and that they should give those profits to the government, as the government can better spend that money.
With that underlying attitude, it’s no wonder that the current administration and Congress are taking a number of moves which are not good for private business.
The shutdown of the Keystone Pipeline project was only the tip of the iceberg in this, as they are doing a number of other things which are taking away business profits, causing people to lose their jobs and sending jobs overseas.
Out National Debt
I’ve been hearing that our national debt is unsustainable at least since 2009. Yet it continues to climb and as I already mentioned, talking about government spending being out of control, it is climbing faster than ever.
I can remember when it was said that a national debt higher than our GNP was unsustainable. Well, we’re well past that, with the national debt over 28 trillion right now and the GNP at about 22 trillion. So why haven’t we crashed already? Because the US dollar is the world’s reserve currency.
We literally export our debt overseas, because other countries need American dollars to do business.
With the current budget and infrastructure bills in Congress, there’s no saying just how bad our national debt will become. But with other major world players trying to take over the dollar’s place as the world’s reserve currency, things are on very shaky ground.
Media Hiding the Truth
Finally, the mainstream media isn’t telling us the truth about what is happening. The term “fake news” gained a lot of popularity over the last few years, first as a smear campaign aimed at right-wing news sources and then as a description of what comes out of the legacy media.
With everything being seen as being political, every story is “spun” to make Democrats look good and Republicans look bad.
The big problem with this is that the American people are put in the place of trying to make decisions based on flawed information. When we don’t know what’s really happening, we can’t prepare. Yet the media, rather than just presenting the facts, is painting everything with a political brush.
Ultimately, this means that instead of making the kinds of decisions which will help forestall any financial disaster and will best protect our families, we are making decisions based upon emotion. All those people who are buying houses right now, driving the prices up, wouldn’t be buying them if they realized we’re on the brink of a financial cliff.
Yet because they are being kept in the dark, they’re literally helping to build that cliff higher. They will be the ones to suffer, rather than anyone sitting in a plush office in Washington DC or a plush office on Wall Street.