Authored by Brandon Smith via Alt-Market.com,
The news cycle moves so quickly these days writing analysis on current events becomes difficult; the moment you publish an examination of the situation people have already moved on to the next disaster. So, today I’m not going to do that. Instead, let’s look at current trends and project what is likely to happen in the next couple of months. In my article ‘How The Pandemic Crisis Will Probably Develop Over The Next Year’ published in early March, I outlined what I believed would be the major developments on a longer timetable. Some of these predictions have already occurred.
Now I would like to tackle a shorter timetable and focus more specifically on the economic side of things, along with the effects of government lockdowns and how they will continue. Yes, that’s right, if you think the “reopening” of the economy is going to be widespread, or that it will last, don’t get your hopes up. I am using a 60 day model because I have observed that the average non-aware person appears to be about two months behind those of us in the liberty movement in terms of seeing the dangers ahead.
First and foremost, the lockdown issue is on almost everyone’s mind, and as I’ve been saying for the past month, it would not take long before people start freaking out about their financial prospects once they realize this thing may not be over “in two weeks” as we keep hearing every two weeks from the mainstream media, state governments and Donald Trump.
The “two weeks until reopen” mantra is designed to keep the public placated and docile, and the establishment will continue to use it until people are finally fed up, which is already beginning to happen.
Lockdown protests are sparking up across the country and it’s only going to get worse from now on. Understand though that establishment elites probably expected this, especially in the US, and they are planning to use civil unrest to their advantage.
Do not be surprised if some areas of the country do indeed “reopen” next month, but expect these locations to be primarily rural. Do NOT count on first and second tier cities to reopen, at least nowhere near the activity that they had previous to the viral outbreak. In fact, while rural towns try to go back to normalcy, many major cities will probably double down and increase restrictions rather than loosen them.
Why do I think this will happen? I’ve noticed an odd narrative being pushed in the mainstream media lately that has me concerned. The MSM is aggressively promoting the notion that rural states and counties are about to be crushed by the coronavirus, and looser restrictions in these places are “a danger to everyone”.
Now, if you read between the lines in this propaganda, what I see is not the media reporting on what is happening now, but what they expect to happen soon. In my area of Montana there is no community spread of the virus, and this is common to many parts of rural America. However, what if rural towns reopen while large metropolitan areas remain closed for business? Unless travel restrictions are instituted, expect a FLOOD of city dwellers to pour into rural areas looking for a taste of freedom and some open bars and restaurants.
If your small town is within 1-2 hours drive of a large city, get ready for a parade of yuppies on mainstreet looking for a vacation from lockdown.
This in itself is not a big deal. If people want to drive from the city to spend money in small town America then that’s a benefit to struggling rural communities (and a bizarre 180 degree shift from the norm). But here is what I think will happen next:
After about two weeks of reopening, small towns across the US will have a massive spike in infection numbers and community spread. Viral clusters will develop and some people will die. Does this mean our economy should be frozen to the point of collapse or that medical martial law is the answer? No, absolutely not. But the media is already gearing up for the big “we told you so”, and as rural infections skyrocket state governments and the federal government will start calling for renewed lockdowns even more harsh than before. The rest of the world will say “that’s what those Americans (conservative Americans) get for being selfish and trying to reopen too soon”.
The economy cannot be opened one piece at a time, it has to be opened all at once. Otherwise, you are going to get a huge influx of people to reopened regions and an inordinate amount of infection cases will follow in those areas, exaggerating the spread of the virus. Of course, a full reopening of the nation is not going to happen.
Get ready for a great big fake wrestling match between state governments and Trump in terms of how to handle ending lockdowns. Take note though that Trump flip-flops so much on state power vs. executive power that no one actually knows where he really stands on the issue; this is by design.
We hear a lot of complaints about the World Health Organization and China hiding or suppressing information on the coronavirus and the extent of the danger to the public. Yet Trump was downplaying the pandemic in the EXACT same way in January, claiming that Chinese data was trustworthy and that the virus was under control. This past week Trump seems to be taking the WHO and China to task, but is any of this real?
Trump’s persona is meant to be ambiguous and chameleon-like, so that he can be presented as all things to all people. For the political left he’s a boogeyman, a bumbling conservative villain and statist that is destroying the country; he acts as a catalyst to drive them even more insane than they already are. For some on the political right, Trump is a savior, or a martyr. They place him on a pedestal so high that he can do no wrong and some even believe he is actually fighting a “secret war” with the elites using subversive tactics despite the fact that half of his cabinet is made up of banking and Council on Foreign Relations alumni.
This absurdity has divided the liberty movement into different camps – Those who realize Trump is a fraud, and those who treat him like a 4D chess playing god.
I fully expect Trump to flip-flop again in the next two months. For now, he is acting like a champion of the people defending lockdown protesters and pushing for a quick reopen. After the next wave of infections and deaths occur, do not be surprised in he suddenly calls for stringent lockdown procedures.
Economically, new lockdowns after a short reopen will devastate small businesses that are clamoring for oxygen already. The much vaunted small business stimulus package was a dud, and it burned up in less than a week. Another stimulus is on the table, but it is being contested. If another bailout is passed it will vanish yet again with most small businesses still not receiving a dime. Bottom line: Too-big-to-fail corporations are going to get their money, and small businesses will get little or none after the next 60 days. This means that 50% of the jobs in the country are now on the chopping block, and most of them will not return because these businesses were already on the ropes with razor thin margins and extensive debt obligations.
The economy is already dead, the pin to the grenade has already been pulled, the majority of Americans simply don’t realize it yet.
In terms of individual government aid, some laid off employee are sitting pretty, though, at least for a little while. The stimulus measures are beginning to reach the newly jobless on top of their normal unemployment benefits, so even if businesses reopen, they may have a hard time finding people to work for them. You can make more money from government checks right now than you can working full time at almost any service based business while also avoiding “the Rona”. But what these people don’t realize is that this windfall is going to dissipate quickly.
Other recently unemployed people are still waiting for their checks, showing the government response to be uneven.
Stimulus is drying up fast and everyone and their mother has a hand out to get theirs, with corporations being the biggest drain. The fact that the small business stimulus disappeared in under a week should tell you what is about to happen with individual stimulus measures. But beyond this problem is the unspoken issue of supply chain disruptions and inflation.
What good is your government check if 90% of the stores are shut down, 50% of the items you want to buy are considered “non-essential”and restricted, and the items you are allowed to buy are skyrocketing in price? The common American is being set up for a shock they are not prepared for when they realize that government checks (Universal Basic Income) are barely going to keep them alive, let alone grant them months of paid leisure. I think the awareness of this will hit the general public in around 60 days.
To reiterate, the supply chain breakdown will go mainstream in a couple months. The stores are sparse right now; they are stretching inventory to fill gap in shelves and limiting purchases on a long list of items to one per customer, but they aren’t in crisis mode yet. With the biggest producers of meat products shutting down as well as farms having trouble hiring workers to process produce and other goods.
The lockdowns caused an initial drop in some prices due to closed restaurants and oversupply, but this is soon to end as supply is about to be destroyed because of lack of production. Economic collapse rarely if ever leads to advantages for consumers; this is a fallacy from the depression era which for some reason is still perpetuated by uneducated economists today.
The name for this type of event is a “stagflationary crisis” and it is something I have been warning about for years. It means price inflation in necessities while deflation occurs in wages, many assets and some commodities. The oil market is an indicator of these mechanics in action. As oil plunges, the public gets cheap gasoline, but the price collapse also represents a collapse in global energy demand, and thus a collapse in production. A collapse in production leads to less supply, and thus higher prices, and the cycle continue until everything breaks and the populace is reduced to one of two choices – poverty or self sufficiency.
The extent of the crisis will become much more clear in the next two months to the majority. The result will be civil unrest in the summer, likely followed by extreme poverty levels in the winter. No measure of “reopening” is going to do much to stop the avalanche that has already been started. The solution is always the same: localized trade and production and removing yourself and your community from dependency on the establishment controlled economy. It’s certainly difficult, but it is possible. What is not possible is fixing the broken and corrupt economy we have now or stopping the current collapse. This is a fool’s errand for people living in unicorn land.