Guest Post by Suede
During the last few months, many Americans have found themselves concerned for their health. Masks and social distancing are still common sights to see while walking in public. In California, Gavin Newsom called for mandatory masks in public spaces, though here in my conservative suburb Gavin doesn’t hold much sway. As this quarantine continues and the epidemic still stands ominous over the masses, many are starting to realize that getting sick is not the only worry.
We Are Not Working
In April, well over 30 million Americans applied for unemployment. Over 6 million applied in just 1 week. Nearly 10 percent of America’s population applying for unemployment is staggering. The most unemployment claims in a single week in the entire history of the system.
Due to social distancing practices and general quarantine, workers all around the country are unable to enter their offices, unable to serve tables at restaurants that are struggling to stay in business with carryout and delivery. Every industry imaginable has been impacted by the pandemic.
With Americans out of work and only recently able to wipe their back-sides, tensions are high and finances are tight. Small businesses that weren’t prepared for a complete economic shutdown are some of the most impacted. According to the National Main Street Center survey, of the estimated 30 million small businesses here in America, 7.5 million are at risk of permanent shutdown in the next 5 months with 3.5 million small businesses projected to fail in the next 2 months. That’s almost 30% of small businesses.
Without extreme remediation, the cumulative effect of small business closure and unemployment rates overall spell trouble for the American way of life. But our problem in America runs much deeper.
The Not-So-Mighty Dollar
Most Americans will be familiar with the phrase “The Almighty Dollar”
This terminology references the power exerted over the public by the fundamental need for purchasing power. Capitalism in America was once its greatest asset leading innovations in technology the catapulted the nation and, arguably, the world, forward into the modern age. With modernity, those minds that once sought new ways to improve the quality of living and expand the limits of human potential, now are focused on improving their own quality of living by expanding the potential of private capital.
In 2008, the world witnessed the result of rampant capitalism when high risk lending practices coupled with an uninformed public culminated into an economic crisis we call “The Recession of ‘08”. Banks offered loans to customers with little to no chance of ever actually paying them off. Due to the way the American monetary system works, those loans created a massive increase in the amount of buying power for many but with nothing to back that power, there was bound to be consequences. Newly qualified home buyers entered the market ready to buy houses they didn’t know they couldn’t afford, which inflated the market, making home prices fly out of control. A home worth under 300k in 2006 may have sold for nearly 800k in 2008 with no real value having been added to the property. Banks that issued these sub-prime loans created money out of thin air, an alchemical concoction where the hopes and dreams of millions were collected and distilled, extracting their power and potential, leaving the poverty and despair that remained to be dealt with by those foolish enough to believe they could own a home. When the large financial institutions had siphoned off all they could, the American people were left dry and unable to repay their now massive debts. Banks saw less and less of their debt repayments until eventually, many were reduced to near insolvency.
Then, believe it or not, they sold the houses back to us again. With the Emergency Economic Stabilization Act of 2008 the American government allocated over 700 billion dollars of taxpayer money to the purchase of “toxic assets” i.e. the mortgages that would otherwise never be paid.
To summarize, between 2007 and 2009, major financial institutions ballooned the real estate market by selling homes to people who couldn’t afford them and then when those people inevitably defaulted the institutions sold their debts to the government who purchased them with tax money collected from the same people who bought the homes in the first place.
Back to the dollar.
This Chart shows the National Debt since 1990 (It might be behind a paywall if you try to go back to look a second time)
The marked increase in the rate of increase in 2008 shows how this first financial crisis set things in motion for the events of today. In 07 the national debt was 9 trillion dollars. Here in 2020 it is nearly 25 trillion.
What’s that got to do with the value of the dollar?
This is not “The Government’s National Debt” this is The Public National Debt. Our government has incurred the debt, but we as the taxpayers are the ones responsible for its repayment in the end. A few moments of math later and that amounts to nearly 70,000 dollars for every woman man and child in America. Your children when they are born will immediately be in more debt than many medical students.
But who are we indebted to? Ourselves?
Well, 27% of our debt is to the government through intragovernmental holdings. All that extra revenue from various taxes is invested into treasury bonds, where the money is liquidated and used. The remaining 73% is owed to the public. So Americans owe other Americans? Not quite.
Of the nearly 20 trillion dollars in public debts that are not intragovernmental, about 7 trillion is actually owed to other countries. Americans owe other Americans about 13 trillion dollars, but they also owe countries like Japan and China. In 2020 we owe other countries the equivalent of our entire national debt in the early 2000s.
The value of the dollar is plummeting
A single dollar in 1800 would be worth 20 dollars today. Much of this inflation started in the 70s and since then, inflation hasn’t slowed much. These factors are all at play in 2020, a crucial election year.
The Impending Crash
Social issues have taken the forefront of American consciousness in the last decade but the presidential candidate who takes over in 2020, due to the effect of COVID-19, will inherit a nation deeply in debt with no means of actually repaying it. If they try to continue the status quo, the amount of debt and inflation that will ensue will be massive and there’s good reason to believe that production economies in the east will move in. Economic take-over is likely in the coming decade if things don’t change soon. We don’t make anything in America, at least nothing that makes it out, we import and consume. That has been the American Way, modern times have only exacerbated the issue, now we can import and consume more, more efficiently. Who is going to pay all of those pensions? Who is going to pay for all those retirements?
If the dollar collapses, America’s social landscape is going change with it. The way things are going right now, many are upset with the government, upset with the practices of police, upset with the system founded on theft and slavery.
This article is not a prediction hoping to instill fear for the inevitable.
The American people are part of the problem.
This article is an attempt to get the information out and get people thinking.
About the Author
Hello, you can call me Suede. I am a Millennial living in Southern California and over the course of my short life I’ve worked in more industries than many will ever experience, experimented with psychoactive substances and explored the inner workings of the human mind to find the underlying truths that we all live with. My journey has led me all over the United States and a few places outside it in order to understand what makes a life worth living. I am an entrepreneur, an autodidact, and a creator. I am Suede, nice to meet you.