Remember when two mall dwellers from the early 2000s, AMC and GameStop, suddenly became the two hottest stocks on the market? And when someone paid $ 69 million for a digital photo that you can always view for free? Hey, what about when Elon Musk ditched a cryptocurrency, sending its value soar for no discernible reason other than the hype of the world’s most sophomoric hype man?
None of this makes sense. It’s not that it can’t be explained – it can, as long as your eyes don’t focus on terms like ‘short squeeze’ or ‘non-fungible token’ or ‘blockchain’. But it is not because it is explained that this logic, you know? These are the kinds of things that happen when the economy stops working by the rules we thought everyone agreed to. Things have always been rigged in favor of the rich and powerful, but that’s ridiculous.
As the second year of the coronavirus rages on, it seems we are increasingly detached from a shared reality. If you are in the middle or lower class, the last two years have probably been defined by a loss of: loved ones, of a job, of savings that you had to tap into to pay your bills. If you’re in a higher tax bracket, a few years of the pandemic have likely pumped up your bottom line. You could in fact be better than before.
Increasingly, the global economy seems to reflect only the interests of the wealthiest among us, and new vehicles of wealth creation have offered more opportunities for the haves to separate from the have-nots. 2021 is the year the economy has finally made a complete break from reality – but maybe, just maybe, a realignment is on the horizon.
The disparity of savings
Only 37% of people had $ 500 hidden for unforeseen expenses before the pandemic. Since the coronavirus hit, the economies of most Americans have fallen to a low record. Today, 40% of Americans have saved less than $ 300, and they increasingly have to tap into those funds to survive, making it all the more difficult to create any kind of nest egg. One in five households has lost all of their savings over the past couple of years just trying to stay afloat.
The stimulus checks arrived, but they were too small and too infrequent to help replenish savings accounts. Most families immediately spent the money on necessities: Almost three quarters of families used their first check to pay rent and bills, and many used subsequent checks to pay off debts. Very few people were able to hide this money.
Upper-class Americans, on the other hand, actually saved Following during the pandemic, in part because they suffered fewer losses initially. With businesses closed, restaurants closed, and daily commutes on hiatus, they’ve actually cut back on spending. Wealthy households saw their overall spending fall by 17% during the first months of the pandemic, according to a Harvard study, compared to just 4% for low- and middle-income households.
Low- and middle-income households were already severely disadvantaged when it comes to saving. The pandemic widened that gap, allowing those who were already financially comfortable to extend their safety net, while those who needed it most had to walk a tightrope with little support while waiting. if they fell.
While workers suffer, businesses thrive
There are some vital signs that are supposed to tell us how healthy the economy is: unemployment insurance claims, consumer confidence, new home construction. When these things look good – unemployment is low, confidence is high, many new homes are emerging – then the economy should be booming. When the opposite happens, expect a recession.
Something went wrong this year. Check these indicators, and they tell you we’re headed for a downturn. Unemployment benefit claims reached record levels, with thousands of people leave the job market completely. Consumer confidence hits a new low in summer, just when everyone thought we were going to get back to normal with widespread vaccine availability. New home construction, constrained by high material costs, supply chain issues and rising prices that are eliminating many potential buyers, fell to new lows.
And yet, the stock market is skyrocketing. Day after day, week after week, the averages of the S&P 500, the Dow Jones Industrial Average and the Nasdaq reach records. Large companies are declare record profits. CEOs brought home big, big bonus.
Turns out, these metrics mean nothing as long as the people at the top continue to see profit. Need proof? The Washington Post found that 45 of the 50 largest companies in the United States managed to turn a profit during the pandemic. And what did they do with this money? Well, more than half of the companies have made redundancies, reducing their collective workforce by more than 100,000 people. Then they turned around and handed the profits over to the shareholders. More than 79% of their total profits were spent on share buybacks and dividend payments, distributing $ 240 billion to shareholders.
Meanwhile, laid-off workers – those who would spend money on goods or save for a house – were left with unemployment checks and endless job searches while major shareholders saw their bottom line. to augment. The workers who survived these layoffs did not benefit much either. Speak Brooking InstituteWhile large companies saw their profits increase an average of 39%, they raised the wages of essential workers by just $ 1.11 an hour.
The good news is that workers have grown fed up with being left out and voiced their discontent. 2021 saw the greater push for organized work in years, with more unionized workforces and winning big against the companies that tried to break the efforts. People who are fed up with being exploited, who are expected to make it through the pandemic and other crises, and see little pay and little benefit in return are start to push back – and labor shortage give them leverage to do so.
Perhaps the craziest trend of 2021 has been the cryptocurrency explosion. Bitcoin and some of the major altcoins reach records, seeing comically absurd gains on the way to the top. We are talking about hundreds, if not thousands of percent increase.
And then NFTs, or non-fungible tokens, became a thing. Explaining these things is a nightmare, and what they are in theory isn’t even what they actually get used to in practice. In theory, an NFT is a way for artists to sell unique works of art, the ownership of which is tracked on the blockchain (that’s a whole different explanation, just think of it as a public ledger of all transactions. ) so you always know who owns it and who made it. In reality, however, NFTs have become status symbols that rich children buy and sell only to cash in the completely fictitious value assigned to them.
Of course, there are new goals for TVNs that could, hypothetically, benefit artists. But for the most part, NFTs have gained attention because they are the world’s most expensive profile photo generator, with the mediocre digital artwork to come with it. Look at these cartoon monkeys and try to understand that people spent millions of dollars to buy them. They have no intrinsic value, except that owning them shows you had millions to spend on them, and the rich love that stuff.
Meanwhile, crypto, while being marketed as accessible to everyone, really isn’t. Most people who put money in have some money aside to play with, a luxury that is not available to most Americans. Almost 70% of crypto investors have an income of $ 60,000 or more.
But with the quick wins, it’s hard for low-income people not to get the feeling of FOMO. There is a get-rich-quick opportunity that is watching them. They watch other people throw thousands of dollars into a coin and come out a millionaire on the other side – sometimes damn almost instantly. So more people get involved, and most are convinced that they will also get rich. Two-thirds of Generation Z think they will become millionaires through crypto. In reality, they will be the ones holding the bag.
The truth is, just like more traditional wealth, cryptocurrency wealth is highly consolidated. the top 0.01% of Bitcoin holders control more than a quarter of the total wealth of the cryptocurrency. Bitcoin is not a way to redistribute wealth, as some of its bigger shillers claim. It is a way for the wealthier people to increase their wealth, and they need more people to keep buying so that their earnings increase.
Cryptocurrency is volatile and unreliable; it could go to zero in one day. But by the time that happens, you can bet the rich will have cashed in, and the people who have been promised an opportunity to build generational wealth will be the ones to feel the losses.
Making it all the more ridiculous is the fact that everything is made up. Bitcoin was a thought experiment that went too far and that even the project developers have called a failure. The rest is no different. Hell, dogecoin has skyrocketed in value this year because Elon Musk tweeted about it, but the creators of dogecoin will tell you it’s no use; it was literally designed to be worthless. This is all speculation and hype, smoke and mirrors, a game where the last people to know (or the last people to afford to buy) hold the bag.
A new reality in 2022?
The economy has been hanging on to reality by a rope for years now. The fact that millions of Americans are struggling as the richest 1% gobble up more and more wealth has served as a warning sign. But in 2021, the thread was completely cut.
If there is any hope of a return to normal, it is with the workers. Solutions that put workers first, focus on work and seek fairer working conditions are those that offer an opportunity to make things right. Neither crypto, nor NFT, nor stocks, nor any of the other little tools the rich have successfully used to increase their lead over the rest of us. These things are all products of created and inflated value. If we are to mend our shattered economy, we’ll have to go back to putting the real stuff first.