The whole world is going through very difficult economic times. Supply chains are being disrupted and entire economies are collapsing all over the world. The United States has the largest economy in the world but also it has not been spared by this global economic meltdown. The US economy has also been shut down at this moment we are at the verge of a total collapse.
If the US economy remains shut for the next 2-3 months, we will witness a historic number of layoffs that has not been experienced for many decades. What has already happened so far is difficult to believe. It is just last week when the department of labor announced that more than 3.3 million Americans had already lost their jobs and they were filing for unemployment benefits across various states. This is more than four times compared to the last all time unemployment claims. Things are getting worse every passing day and this week experts are warning that the number of unemployed people will continue surging as more companies and businesses shut down their operations. This will be the most challenging time for the United States economically because this level of unemployment was lastly seen during the great depression back in the 1930s.
Shutting down the US economy will save many lives but at the same time the economy will be crippled and it might take many months if not years for the US to recover. According to a survey that was recently conducted, most of the US companies said that they will lay off more employees at some point in the next three months, if this economic meltdown persists. In this survey, it was revealed that 49 percent of American companies are likely to conduct layoffs within 3 months while 11 percent have already conducted permanent layoffs in the last 2 months. If this economic fallout continues for the next 3 months, it is unimaginable what will happen to the unemployment numbers. We might wake up one day only to realize that 30-50 million Americans have already lost their jobs. This sounds crazy but the Federal Reserve has already warned that up to 32 percent of Americans might lose their jobs. If this happens the great depression will look like nothing. Economists are warning that the US is about to enter into another great depression if this economic slowdown continues for months. If the economy remains paralyzed for long, the GDP will shrink to levels never seen before and many companies will go bankrupt. The economy of the United States is already at the tipping point and this is just the beginning of the economic crisis.
The Federal Reserve has been trying to save the economy by pumping trillions of dollars into the system but this may not work. The economy is already dysfunctional; people are not working and injecting more cash to the economy will only cause hyperinflation. The FED has already initiated an unlimited quantitative easing program and they have announced that they will be buying mortgage backed securities and treasuries. They have plans to purchase assets worth up to $700 billion. At the same time they will also finance and purchase municipal and corporate bonds. This looks like the Federal Reserve’s Final solution but at the same time it is dangerous. This uncontrolled printing of money will erode the credibility of the dollar and America might end up becoming the new Zimbabwe. American corporations and even individuals are being bailed out by the FED and this is turning out to be the biggest bailout in the history of America.
To do this unlimited quantitative easing, the Federal Reserve is printing a lot of money without any regulation and this is not good for the well being of the system even if we are going through an economic meltdown. We have already taken a very dangerous road and at one point we might have a lot of money chasing a few products in the market place and this will force the price to double or even quadruple. This will be the end of the dominance of the US dollars as the global reserve currency. Continued printing of money by the Federal Reserve will make the dollar lose much of its value and it will be too late before we realize that the dollar has lost 50 percent of its value. We might also wake up to realize that everyone has dumped the dollar and it is no longer in use for international trade. No matter the amount of cash the FED will pump into the economy, there will; be no much improvement. Actually the FED is doing more harm than good to the economy. Opening the economy is the only solution; people have work and create real value in the economy.
The only way to avoid this is to put back the United States back to work as soon as possible. However, this might not happen at the moment because president Trump has already extended the economy closure period. This will hurt the US economy a lot and in the process trillions of dollars will be lost. Experts are already predicting that the US economy will lose up to $4 trillion. Even during the Second World War, the US never saw this level of disruption and at the moment the future remains uncertain. We have a big economic disruption that most Americans have never even thought of. We have a historic crisis and this time all the bubbles in the American system will blow up. The wind is no longer in our favor despite the Federal Reserve’s efforts; the bubbles cannot be inflated again. The economy collapsing and things will not change any time soon.
It is so sad that for many years the US economy has been debt dependent and the national prosperity has always been fueled by debts. It looks as if the day of reckoning is finally here and it is time to pay. The fake prosperity is being smashed to pieces and its now the time to pay back the debts. What is happening is far beyond our imagination. Millions of people are jobless at the moment and it is difficult to believe that many will also be lose their jobs in the coming weeks. The aid package from the government will barely sustain even for three weeks.
We have the worst economic meltdown and a lot is changing in the society and it might be a matter of days before most Americans find it almost impossible for them to place food on the table. More than 40 percent of the American populations do not have enough savings to support themselves for even 2 months if they lose their jobs today. Most people live pay check to paycheck and this will make it almost impossible for most people to survive the next 2-3 months if the economy does not open up. This time round everyone in America will have to be bailed out.
All across the country everyone is fearing that this economic crisis will spring up social unrest. Actually some of the high end stores across the country have been boarding up their stores as they fear social unrest. This has already begun happening in other countries like Italy where people are taking advantage of this crisis to steal whatever they can lay their hands on. In a few weeks a lot is coming to America and this will be a historic economic and social meltdown. The 2008 global financial crisis will look like nothing when compared to what is happening in our society.
People are panicking and everyone is buying as much as they can from the food stores. Food banks all over the nation are overwhelmed with an ever increasing demand and people have to wait for hours to pick up food. As people run out of money- food shortage will be a real thing in the US. Many household in America were unprepared for this level of social and economic disruption and the middle class workers are the ones who will be hit most.
In the middle of this economic turbulence, the banking sector in the US is also in a big trouble. Many banks were overleveraged by issuing credit beyond their limit. Because of this economic downturn, most of the creditors will default and this will leave most banks at the verge of collapsing. Very soon credit lines are going to freeze and the whole economy will be brought to an abrupt halt. The financial markets are also in a free fall and the stock market has already fallen by more than 30 percent and in the process Americans have lost a big chunk of their investment.
It is really painful for the American people but there is no way we can avoid this. Unless the health problem is solved, it will be difficult to open up the economy. The government should focus on solving this health problem that is crippling the economy. At the same time we have to acknowledge that we have a system that is unsustainable in the long run. This crisis is differentiating the fake from the real and this is the time when we should acknowledge that there is a need for a better system that will serve the American people even when there is an economic downturn.