|The Financial Sector Has Grown Too Large|
The real economy is neither vibrant nor healthy and current trends should give us pause. An example of this is seen in agriculture. Even if you don't farm for a living it is important to realize that farm income is not contained in a closed-loop but spills into other parts of the economy, this is true in all of the sectors of our economy. An even bigger issue is how online giant Amazon is allowed to decimate retailers and small businesses aided by the USPS and governments granting it special rates, privileges, and tax abatements. In many parts of America, Wall Street money has become the largest obstacle for small businesses trying to remain competitive. How does a small business abandoned by the banking community compete with companies able to access billions of dollars of low-cost capital?
The truth is small business owners often tied to brick and mortar are forced to wear many hats and their workers are often required to perform several different and distinct tasks. This often means large companies are better candidates for utilizing robots and automation as a way to reduce labor costs. This means a company such as Amazon gains a huge advantage over small and local businesses and helps explain why its CEO Jeff Bezos recently endorsed the idea of a higher minimum wage. For Bezos, this is a bonus in that it will help eliminate competition all across America as he doubles down on adding more robots to his workforce.
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We are about to see the problems in the other sectors of the economy raising their ugly heads and dish out massive pain. When the temporary props, such as the $600 a week to the unemployed, stimulus checks, the Payroll Protection Program (PPP), and aid to State and local governments, come to an end, look out below. These programs being used to move us forward will not gracefully expire, but merely set the stage for another round of props perpetuating this false economy to evolve. In the end, our future has a way of being tied to reality and certain economic laws as well as laws of nature that hope and delusion cannot defy. While these bonds can be ignored for a time the force they have over us at some point will suddenly pull us crashing to the ground.
For decades the financial sector has been given rule over the real economy and over events happening in the shops and stores throughout the land. In an effort to stay rooted in reality we should ponder the possibility that we are being played or duped by the financial sector. This includes not just how strong the economy really is, but as to the links and bonds with the economy through both financial institutions and the government. The real economy that lives beyond our financial institutions may be in a death struggle. Those in power tend to warp and skew both numbers and future projections in a self-serving way. A combination of low-interest rates, government spending, and easy money coupled with massive stock buybacks have given many people a false impression all is well, but looking at the numbers and beyond it becomes clear something is dreadfully wrong.
Today we see a landscape of empty and under-leased buildings that once housed thriving businesses that provided Americans with good-paying jobs. This makes it difficult to think things are getting better. When looking at new job formation details show the growth in low paying part-time jobs and many people have left the job market, many too retire early because their skills are no longer needed. To shed even more light on our woes we only need to take a closer look at auto sales, 31% of those buying cars are taking out sub-prime loans and these loans are being stretched out far longer than ever before. Student debt continues has grown at an alarming pace and will affect the disposable income of many of our youth for years to come. Ironically in stark contrast, job opportunities are on the wane.
|Empty Storefronts Are Far Too Common|
Promises have been made, and expectations have been raised that the economy will power through, but are they realistic? After twelve long years of near or zero interest rates, massive government deficits, and watching tons of money and stimulus being poured into the economy we remain mired in slow growth. Now, the weight of carrying a large number of unemployed and people who have been dropped from the workforce is about to wear down society through attrition. Most of these people have little in the way of savings, this means the burden of caring for them will be transferred to society. If too many people shift into this category the fabric that holds us together as a nation and as a people will be shred to ruin. All this continues to be made worse by new mandates and regulations flowing out of Washington and the lack of needed reform.
We should never underestimate just how far untethered computer-driven trading can distance itself from the true economy. This increases the possibility we may be in another phase of the "Wash, Rinse, Repeat" cycle that flushes money away from the common man and into the hands of the 1% that eats our lunch. The truth is most Americans only get to smell the feast and have no seat at the table when the Wall Street elite dine. We get little more than the promise that our pension or 401 will be solvent when we need the money, that is if we are lucky enough to have either. Sadly, the average American is lucky if they are allowed even a few scraps that fall from the table, again highlighting why bankers have been reviled throughout history. It is ironic this massive sector of our economy produces nothing but holds such power.