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The Economy Continues To Unravel Despite All Stimulus Measures

Brandon Smith
September 4th, 2020
Alt-Market
Comments (6)

This article was originally published by Brandon Smith at Alt-Market. 

Since the pandemic lockdowns were first implemented in the US I have been more concerned with the government and central bank response than the virus itself. As I have noted in past articles, the pandemic restrictions and subsequent economic and social crisis events they help to create will cause far more deaths than Covid-19 ever will. Not only that, but the actions of the Federal Reserve continue to con the American public into believing that there is some kind of “plan” to stop the crash that THEY engineered.

The only agenda of the Fed is to increase the pain in the long term; they have no intention of actually preventing any disaster.

This is evidenced in comments by voting members of the Fed, including Neel Kashkari who recently argued for the enforcement of hard lockdowns for at least six weeks in the US, all because the US savings rate was going up. Meaning, because Americans are saving more in order to protect themselves from economic fallout, Kashkari thinks we should be punished with an economic shutdown that would force us to spend whatever we have been able to save.

Do you see how that works?

Fed members and government officials demand hard lockdowns, depleting public savings, and destroying small businesses. Then, the public has to beg the Fed and the government for more and more stimulus measures so that they can survive. The people and the system become dependent on a single point of support – fiat money creation and welfare. Yet, the evidence suggests that this strategy is failing to do much of anything except stall the inevitable for a very short time.

If the goal was really to reduce the pain of the pandemic as much as possible, then the strategy should be to keep the economy as open as possible and let the virus run its course.  By initiating lockdowns, all we are doing is extending the economic damage over the span of years instead of months.  We can deal with the comparatively minimal deaths associated with the virus; we cannot handle the disaster that is about to befall the financial system.

The small business sector appears to be the most fragile element of the economy right now. The PPP loans that were supposed to shore up small businesses failed miserably, with data showing only 13% to 19% of applicants getting a loan of any kind. Over 64% of small businesses that received a loan are also worried about being approved for loan forgiveness. In other words, of the few small business owners that got a PPP loan more than half do not have the ability to pay the loan back if they end up not qualifying for an exemption.

This problem does not seem to be affecting the corporate sector, however. International companies are enjoying incredible cash infusions from the Fed through overnight loans as well as Fed stimulus propping up stock markets (at least for now). Tech companies in particular are enjoying a rush of investment as the assumption in the day trading world is that the central bank will not allow these companies to fail.

Maybe they are right, but stock markets today DO NOT reflect the health of our system in any way. Stock tickers are a placebo, a Pavlovian trigger for the public, a tool to make people believe that the situation is improving merely because share values are going up. This is not the case.

Small businesses in the US account for around 50% of all employment and job creation. They are a vital part of the economy. Yet, government and central bank measures seem to have left them out in the cold to die.

To be sure, the $600 weekly unemployment enhancement created through the CARES Act passed in March did boost consumer spending, primarily on durable goods such as computers, TVs, cellphones, etc. Spending on services declined though, which is where the majority of small businesses make their money. And, considering the fact that most durable goods are manufactured overseas, this means that the majority of stimulus dollars that went to consumers did not go into the US economy, but foreign exporters like China.

Now, the unemployment enhancement has ended and its return is in question. It will be interesting to see if the boost to purchases of goods will continue without that extra $600 weekly stimulus. Consumer spending rose in July by 1.9%, but this was already a weak print compared to the increases during the previous two months.

Unemployment numbers have declined due to soft reopenings in numerous states, and at the very least some part-time jobs appear to be returning, but nowhere near the level needed to erase the millions of jobs lost since February after the initial lockdowns began. If you count U-6 measurements and unemployed people who have been removed from the rolls for being jobless for too long, the REAL unemployment rate is closer to 30% of working-age Americans. This is essentially Great Depression levels of joblessness.

US GDP has continued to decline by 32% according to the Bureau of Economic Analysis (despite statistical rigging by the Fed and government agencies), and while it’s possible that stimulus slowed the effects of GDP loss, there is no indication what the trillions of dollars created by the Fed have actually bought other than a few months of time and a massive bubble in the stock market.

The economy cannot survive extreme lockdown conditions for any length of time, let alone almost two more months. And, if you want to know what it means when elites in government and central banking call for a “hard lockdowns”, just look at Level 4 restrictions in places like Australia and New Zealand, where only one person can leave home at any given time, can only travel 3 miles from home and only for food and supplies, and anyone caught not wearing a mask is subject to arrest or a $10,000 fine.

This mother in Melbourne, Australia was arrested because of a Facebook post calling for protests over the lockdown restrictions.  She later had to take the post down and offered an apology, saying she did not know it was illegal to post such statements on social media:

Yeah, this kind of Orwellian response will do wonders for any economic recovery, and this is what Kashkari is calling for in the US.  It’s almost as if the Fed and certain politicians WANT a financial collapse in America…

The REAL solution is to stop the lockdown restrictions altogether. If the goal is truly to protect as many American lives as possible for the “greater good”, then the pandemic response must stop. Luckily, it seems that more and more people are beginning to see through the facade and are rejecting the restrictions. Even in Europe and Australia, there have been some signs of protest and rebellion. The problem is that, at least in terms of the economy, it may be too late.

We have to consider the fact that once a large portion of the business sector (like small businesses) takes a massive hit like the one they have suffered over the past several months, many such businesses and jobs will simply not come back. There are many reasons for this, but primarily it’s a matter of debt. The average small business owner carries almost $200,000 in debt for 3-5 years before he reaches profitability or breaks even. This is assuming that there are no major economic catastrophes in that time.

With the pandemic, the riots, the restrictions, etc., businesses will have to take on much more debt with little guarantee of recovery in the next few years let alone the next few months.  Chapter 11 business bankruptcies in the US rose over 26% in the first half of 2020 alone.

Even if lockdown restrictions were completely eradicated tomorrow, a large number of businesses would go bankrupt anyway.  The “Retail Apocalypse” has been growing over the past decade, LONG before the coronavirus was on issue.  Thousands of businesses shut down last year and tens of thousands more are slated to close this year.   The virus and lockdowns simply accelerated the existing decline.

This is why large banks are cutting off loans to business owners and consumers right now; they know exactly where all this is headed.

Banks act as middlemen for the PPP loans financed by the Fed, yet those loans are not getting to most businesses. Banks have also cut credit card lending in the past few months, and general lending has crashed. All of this despite low interest rates for banks receiving stimulus injections from the Fed. Where is all of the money going? They are keeping it for themselves, buying up hard assets as well as propping up the stock market. As noted above, the elites have NO INTENTION of saving the economy, only themselves.

If the stimulus is not getting to the main-street economy then the only purpose it serves is to give the public a false sense of comfort.  The people who gain the most from the ongoing pandemic chaos are establishment elites that want severe restrictions on personal liberty.  Not to mention, the virus and lockdowns offer a convenient scapegoat for the financial crisis that was already brewing due to central bank mismanagement of stimulus, inflation, and interest rates. The bottom line is, the banks do not want the crisis to end.  Why would they?  The longer the panic continues, the more they benefit.

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Author: Brandon Smith
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Date: September 4th, 2020
Website: https://www.alt-market.com

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6 Comments...

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  1. Andrea.Iravani. says:

    Mafia shakes down NYC restaurant owners!

    2/3 of NYC restaurant expect that they will have to close permanently by January, since Mob bosses Andrew Cuomo and DeBlasio refuse to allow restaraunt owners in the five burrows to permit indoor seating, where as indoor seating in the rsst of the state of NY is permissable.

    The restaurant owners are profundly guilty of being independent and successful, employing large numbers of individuals in a wide array of salaries.

    I have personally met bartenders and waitresses whose annual  
    income is far in excess of the average office workers income.

    The governments, banks, and large corporations cannot permit anyone to succeed when they have failed because it makes people realize how mentally incompetent and corrupt they are.

    They are demanding that capitalism cannot work, since they are incompetent, and it was U.S. corporations and capitalism that saved China from its endless revolutions and blood baths under Nixon and the following administrations when the Mao Cultural Revolution adopted the culture, training, expertise, and employment by American corporations.

    Corruption is the number one problem in America! 

    Throw the Mob bosses in government, large corporations, banks, the Federal Reserve, the medical mafia, and the media in prison for their false imprisonment of individuals in their homes, RICO law violations, and  conspiracy to commit treason, fraud, theft, and a long list of other evil sadistic predatory crimes!

    Yes, this was definitely collusion and conspiracy to commit 
    treason, fraud, and theft! 

    Trump has permitted the country go to hell in a hand basket ! 

    Shame! Shame! Shame! 

    So sick of Trump pretending that he is trying to make America Great! Does this country look great to you?! 

    It is criminal negligence, in the very least by the Trump administration, in the very worst –  treason and the other crimes listed above! 

    Small businesses have been targeted! Hair salons have been targeted for their evil ability to support themselves in a non unionized field of employment, and even funeral homes have suffered losses with people unable to have funerals both as a rexult of crowd size restrictions, travel restrictions, and loss of income due to government forced lockdowns!

    Family farms have also been targeted for their evil abilitty to survive, eat, and produce food for people!

    The government and central bank and Wall Street hate us for our freedoms, and keep stealing life, liberty, property and tens of trillions of dollars from us! 

    This is not a revolution! This is an Evil Freak Show and Satanic Circus Act!

    Andrea Iravani

  2. Anonymous says:

    I’m in New Zealand. Australia is more fascist with their road blocks around Melbourne. During lockdown level 4 all three of us went for daily walks to the grocery store, and drove to the park. We were given money equal to being at work. This money was created to devalue our dollar in a race to the bottom. They have made it difficult to hunt by poisoning the entire forests with lingering fluoride based poisons (compound 1080). All part of UN Agenda 21 getting the humans out of the wild areas and dependant on their corporate food supply. Also setting us up for a Holodimir or Irish potato famine type situation. People are generally 60% brainwashed TV watching types, and we have the self appointed “Enforcer sheeple” masquerading as “authorities”.

  3. Andrea.Iravani. says:

    Charles Ortel has exposed BLM Global Network which is where the corporate donations are transfered to Thousand Currents with self-proclaimed “Trained Marxist” convicted Weather Underground Terrorist Susan Rosenberg on the board, the chair woman is also a self-proclaimed Marxist. Why would they take money from rich capitalists? Because they don’t care where the funding comes from, although it is a well known fact that George Sorros is a socialist, which is not specifically a Marxist, but Marx and his followers strongly believe that socialism is merely a step towards communism in what they consider to be a revolutionary process.

    Why would JPM ( $23 trillion AUM ) Chick Filet ( burned to the ground by BLM ) which you forgot to include, Ford Foundation, Nike, Sorros, and other ” unknown people in the shadows” of internet website bragging about their financing of BLM finance a radical Marxist terrorist network? For insurance fraud! Dah! FIRE= Financials Insurance Real Estate, and economist Michael Hudson said on his website that FIRE would replace FANGs. It is a well known fact that they will do anything for money at all, including staging the 9/11 attacks and blaming Muslims that had nothing to do with it, since no planes even struck the buildings, as proven by Ex-CIA expert pilot John Leer, son of Leer Jet founder, and 9/11 Architects and Engineers for Truth, and also willing to lockdown the entire economy based on scientific fraud of a virus as fatal as the seasonal flu as a fall guy for their collapse which everyone knew was coming !

    Andrea Iravani

  4. Anonymous says:

    What’s wrong with you?
    Didn’t your parents teach you to respect authority?

    Now, do as you’re told, sonny.

  5. James says:

    That stimulus will eventually be the cause of the economic meltdown in this country. We really don’t know how many trillions ($5 Trillion? $10 Trillion? More?) have been created out of thin air in the “stimulus packages”. What we do know is when the lock-downs are over and demands return, there will be rampant inflation, eventually hyper-inflation, followed by the hugest crash in world history. The pandemic was an excuse to lock-down the economy, and kick the can further down the road, but the can didn’t go very far, it is right on the edge of today.

  6. Anonymous says:

    Only a fool brings up the subject of national debt.

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