Especially, if the Fed keeps supporting the stock market the way it has been doing, wealth disparities will shoot even higher, leading us to social unrest, looting and riots.
In fact, this has already started in some places. As it was reported several dozen protestors disobeyed social distancing guidelines at a rally at the Capitol building in Austin, Texas, against the state’s lockdown policy.
The fiscal and monetary policies that were supposed to help may cause even more damage. There are so many stimulus programs to ease the economic crisis that they don’t even make sense anymore, because they aren’t really fixing anything. It’s just as putting a band-aid on an exposed fracture.
The Federal Reserve alone has more than 10 programs to purchase debt, and many of these programs are relying on some sort of bailout the Treasury had given to the Fed to be used as a “special-purpose vehicle” of $425 billion dollar in taxpayers money. So yes – we are paying for all of this. Meanwhile, Congress has been gradually authorizing billions in new spendings, and it is expected to surpass $5 trillion dollar by the end of the fiscal year.
The professor of sociology at Albertus Magnus College in Connecticut, Karen Kendrick, told that “poverty, hunger, crime, and social upheaval are a real threat in the US, too. Especially if the government doesn’t step in to soften the blow,” as she analyzes the cases of civil unrest that had happened all over the world in the past few weeks.
In Italy, there are now Police patrols on the supermarkets to stop people from stealing food. Last Tuesday, in Mumbai, thousands of unemployed laborers demonstrated at a railway station after Prime Minister Narendra Modi extended the national lockdown. In Brazil, many cities already have their hospitals in half capacity or completely full, and the government has been denying to pay a R$ 600 monthly aid, which is less than $120/a month, for those who are unemployed or don’t configure as essential workers, making millions of citizens in São Paulo and Rio de Janeiro banging pots and pans from their windows to protest Brazilian President Jair Bolsonaro. Last week, similar demonstrations had also taken place in Indianapolis, Salt Lake City and Columbus, Ohio.
Simultaneously, supermarkets, grocery stores and farmer’s markets are already reporting food shortages, as people are continuing to hoard canned goods, cleaning supplies, and toilet paper to their stockpiles. While farmers and ranchers have been posting on social media that they’re literally being forced to throw away thousands of pounds of food every day, because they are not allowed to sell them.
Last Wednesday, the International Monetary Fund published a report alerting that the health crisis could fuel riots in many countries around the globe if people were left with no jobs or money for food during and after this situation. The Wall Street Journal had also declared that the NYPD has seen a 75% increase in burglaries of businesses.
Professor Kendrick goes on affirming that after World War II ever since America had “started to build up a big middle class, we created a strong base that was economically secure enough that they weren’t willing to risk much. This economic collapse is highly likely to disrupt that. At that point, I don’t see how we can avoid social unrest. There’s no doubt this is going to have a horrific economic and social impacts, and the worse it is, the more likely that people are going to get to the point where social action is the only move forward.”
With class disparities being aggravated by the effects of this economic crisis, social distancing breaking groups apart, risen scarcity in goods at the stores, violence and crime becoming an unexceptional reality around the world, and, in a even more aggravating sphere, government leaders failing to asset the issue properly, we have the perfect recipe for an economic disaster.