Retreat! Middle Class Under Attack! (Covid-19)
Right now, we are in the midst of economic warfare and when the dust settles the middle class may no longer exist.
The first blow to the middle class came in the form of sub-prime mortgages, which was a form of predatory lending that enticed homeowners into taking mortgages that they could not afford once the interest rate skyrocketed.
This is what caused the 2008 housing bubble and many people defaulted on their loans and entered into foreclosure.
Now just 12 years later when it seemed the middle class was starting to get back on its feet, the knockout punch has been delivered in the form of Covid-19.
The exact origin and cause of the virus are not important, but the effects are devastating as the shutdown has forced people into unemployment over night.
At a time when millennials entered the stock market and began seeing their investments grow, suddenly the market crashed forcing them to sell at a loss in order to prepare for the potential of losing their job.
The majority of the middle class do not have savings to last more than 1 month let alone 3 or 4. Most small business owners belong to the middle class, and the lockdown is an event that only a handful of companies can withstand.
The good news for business owners is they are used to the everyday struggle, and their hustle puts them in a much better position to quickly pivot to find a solution to get them through this rough time.
However, employees who have been accustomed to receiving their direct deposit for years and suddenly no longer receive their income, are in uncharted territory.
The idea of saving for a rainy day is something we are all aware of but not many actually prepare for such a day. The day has come, and the rain has quickly become a tsunami.
The government has wasted no time bailing out big businesses with a $2 Trillion stimulus package, although many of them are deemed unessential at the moment and should have millions at their disposal.
Yet, as unemployment claims have ballooned to over 6 million people the stock market has ironically bounced from its bottom, showing no correlation to reality.
Many Americans in the middle class live check to check simply because their disposable income does not allow them to save as much as they wish they could.
With Uber emerging as an alternate job for many over the last few years, many people actually live day to day, so imagine the millions of Uber drivers who suddenly have no income at all.
The daily and weekly pay masked the reality that the rug could be pulled at any time to end the middle class as we know it.
But, at least there is a $1,200 check on the way right?
The $1,200 check will be welcomed by all, simply because everyone will be desperate for cash.
What happens when the money runs out within 3 weeks assuming no one pays their rent, mortgage or any bills at all for that matter?
I am currently under the impression that the lockdown may actually prove to be more dangerous than the virus itself.
If desperate times call for desperate measures, what are we expecting when millions of Americans are backed into a corner and just need food for their family?
It will come to a point when the desperation and frustration boils over and people will have a reaction. What that reaction may be, I have no idea, but based on past events it seems the most logical scenario would be riots and looting as we saw during Hurricane Katrina.
Hopefully, this will be the first time the people receive a bailout as large as the corporations, but unfortunately I am not naive enough to believe that. The hyperinflation that is inevitable due to the injection of unlimited dollars means the dollar will soon lose most of its value if it hasn’t already.
The privately owned Federal Reserve can print money at will as they have consistently shown over the years, so perhaps the solution is as simple as creating a second $2 trillion stimulus package, to buy time to overhaul the fiat system for once and for all.
It is unclear to me how the middle class will come on the other side, but I am hoping for the best and preparing for the worst.
Let me know what you think and how you are getting through these troubling times.