Show Me The Money

America, already reeling under the layered impact of the Covid-19 pandemic, is about to be throttled further under deeper financial strains as Senate Majority Leader Mitch McConnell (R-Ky.) expressed on Tuesday that the GOP is not considering an extension to the $600 Cares Act of expanded unemployment checks.

The political rebuttal to the extension claims it is a “disincentive” for employees to return to work. What has not been a part of this conversation is the fact that “hero” wages are not enough for the average American to pay bloated rent costs and still manage a decent meal.

 The partnership of “at will” work policies and a consistent history of low wages has been a fundamental issue in the ability of Americans to actually save money for any kind of emergency. Wages have not kept up with the increased cost of living. Covid-19 has laid bare the primary issues of social equity imbalances in America.

Black Lives Matter protests continue to rage across the nation leaving a swath of physical and now, divisive political destruction in their wake.

Across the country, previous lively, renewed inner cities have reverted to ghost neighbourhoods of closed businesses and fleeing residents. Homeless people wander the streets in a live version of an apocalyptic Hollywood movie. In New York, Park Avenue apartments are hollow and frayed with untended gardens and grubby doors. Without a strong, cohesive leadership, the US flounders toward the November elections.

The shine of the American Dream is fading along with its tarnished global reputation. The international economic community is starting to raise serious questions about the dollars “privileged” status as the world’s primary reserve currency.

The pandemic has forced us to re-evaluate issues of employment, health, equity and ultimately, how economies work for or, against us as a society.

Portland, Oregon has taken center stage in world news with the un-welcome Federal troops symbolizing a battlefield for Constitutional issues between the conservative Federal government and its liberal States. The White House, under the Posse Comitatus Act, sent in troops to quell the protests even as the State governor rejected the “help”. Other cities have joined the protest against Federal troop involvement in State affairs. The intent of the law prohibits the use of the military in civilian matters but the Insurrection Act suggests the president may use armed forces to subdue an “insurrection or rebellion” to suppress dangerous violence. 

Presidents Kennedy, Johnson and Eisenhower used the Insurrection Act in the 1950’s and 1960’s to enforce court desegregation orders and protect civil rights protesters. In 1992, President George W. Bush used it to order 4,500 troops into Los Angeles to control the rioting after the acquittal of the police officers charged with beating Rodney King.

Legitimate protest or rebellion? Who calls it? Covid-19 is accelerating the question is poised in a legal grey area. The economic domino effect of the pandemic is not being addressed by either the financial sector or government in any long term manner. They are not offering viable solutions to a population under growing financial stress. Applications for unemployment payments continue to be lost in processing and unpaid. Many jobs will never return as small companies close permanently. As the government drags its feet over the price tag of a second stimulus, past months’ rents are due, utility bills need paying, credit cards are maxed out. People are hungry and scared. Food banks across the nation saw a more than 75% increase in demand for basic food supplies and first timer gun sales continue to climb.

Those that can, flee the cities to small towns bringing temporary financial boosts even as they spread the virus. With international borders closed to Americans, even the wealthy are getting trapped behind their gates. Stimulus discussions of tax cuts may briefly benefit companies but do not present a solution for hungry workers. French history indicates that a “let them eat cake” attitude does not benefit anyone.

On Tuesday President Trump conceded in reference to Covid-19 that it “will probably get worse before it gets better”. We knew that months ago, but now it’s “official”. The US reported more than 1000 deaths in a single day for the first time since June. As Americans remain politically divided and politicians dither until the elections, it will continue to get worse. The burning smoke above the closing Chinese embassy in Houston is yet another economic indicator of trouble to come. We are not prepared to support an “America First” only platform on any level of manufacturing or resource management. 

Protectionist trade policies, withdrawal from partnerships such as the Paris Agreement on Climate, Trans-Pacific Partnership, World Health Organization and other traditional, international trade alliances are seriously damaging. Global trade is what kept America strong.

If the dollar collapses there will be three, immediate key results: It will be inflationary. A short-term buffer against deflation yet another domino falling towards the onset of stagflation. 

This will lead to a combination of slow, weak economic growth, rising inflation and little or no job growth that will wreak havoc on the financial markets.

We have reached the tipping point where it really doesn’t matter who gets elected. The fallout of weak and divided political leadership across the country has caused a tidal wave of damage no single presidency can turn.

With a week still to decide on the next stimulus package, it might be a good idea to print some more money and keep both the people and the economy fed for just a little while longer. Covid-19 doesn’t care either way and it is no longer a matter of “if” but “when” it comes knocking on all our doors.