Bunker Mentality 3

Before we proceed to discuss consequences of the COVID19 policies, we will list certain facts that have been reported relative to these consequences:

1. As the economy is “allowed” to reopen, there will be an increase in the infection and death rates; inevitable given the nature of contagious diseases, and even more so a chimeric virus.
2. The current infection rate is estimated at 20%, but likely much higher; it is estimated that as many as 143K Americans will die by August, but again could be more.
3. The rapidly mutating virus is now affecting children and with different symptoms than adults; yet another indication that we are dealing with a chimeric virus.
4. The unemployment rate, already unprecedented in American history, will likely rise; even if we reopen now there are many jobs that will not come back soon, if ever. 
5. Assuming one of the two main political parties wins in November, we will not have an improvement in leadership, partisanship, polarization or civil discourse.
6. None of the drastic financial manipulations of the Federal Reserve, or federal government in general, will improve any of the above, and will actually make things worse. Most of the relief money is going to the usual suspects like large corporations and Wall Street Banks. Main Street, as in the Financial Crisis, is Tuesday’s child.

Perspective is needed when considering what governments usually do when confronted with problems; Ronald Regan clearly understood that when he said “Government does not solve problems; it subsidizes them.”  Creating “money” out of thin air is not an antidote to disease or economic ills.

We can see now some of the consequences taking shape:

1. We are in a greater depression than the Great Depression; a recession was coming anyway with the credit bubble (See earlier post, “The Perfect Storm”); COVID19 policies just pushed the metrics into depression territory.
2. The financial instability will be greater than 2008; the expansion of credit, given the trillions of dollars just created with key strokes, is actually even more debt, placing a burden on Americans that will crush them for even a longer period of economic hardship, likely into future generations.
3. While these relief and stimulus policies sound huge, the bulk of it goes to the usual government cronies like banks and corporations, little to Main Street to alleviate a moribund economy, and driving equities into even higher unrealistic and unsustainable evaluations.
4. When the unemployment benefits, including the augmented Federal funding, eventually run out, and that will be soon enough, people will be left with little to no means of support, and no health benefits to rely on, creating a health crisis greater than COVID19.
5. The food supply chain will be severely impaired, creating malnutrition, adding to the health crisis.
6. There will be increased crime and civil unrest, endemic in such crises, further impacting health.
7. Governments have seized powers by decree; they have been doing so over a long span of time since the turn of the last century, but now at a steroid like induced rate, eroding even further our civil liberties. Power mongers love the “opportunities” crises provide.
8. Politically there will be even further polarization and partisan extremism, adding to an environment ripe for authoritarianism.

The study of economics evolved from sociology.  Many people don’t realize that early works like those of Adam Smith and David Ricardo were studies in sociology, principally focused on the interrelationships among people and their livelihoods. These works gave rise to the creation of the discipline known as economics. Essentially, from a sociological perspective, suspend those relationships and you effectively destroy livelihoods. Plagues have been a part of all human history and have had critical impacts to the economic wellbeing of man, but when you suspend the ability to make a living, you are destroying the means to live and recover. Plagues do kill so people will die, but life goes on…..provided it is not suspended.

While we have discussed how long term consequences were not considered, next we should look at what was unintentionally or even intentionally disregarded or dismissed, and what this informs us regarding that.

#bunkermentality3