More than 30 million Americans have lost their jobs as states and cities nationwide have shut down due to Covid-19.
The official unemployment rate is approaching 15%, though I believe the “real” rate is probably closer to 25%. And it’s going to take years to get back to the near-full employment we were enjoying before the coronavirus struck.
Investors lost trillions as the markets tumbled in February and March. They haven’t made it all back yet … and probably won’t for months to come.
At the same time, between March 18 and April 10, the combined wealth of U.S. billionaires soared by $282 billion, according to a recent report by the Institute for Policy Studies. That’s nearly a 10% increase.
Between the start of the year and April 15, Amazon (NASDAQ:AMZN) CEO Jeff Bezos’ net worth zoomed by $25 billion.
Isn’t that always the way?
Well, it has been for at least a generation.
- In the past 30 years, American billionaires’ wealth skyrocketed 1,130% in 2020 dollars. Meanwhile, median U.S. wealth crept up just 5.4%.
- Since 1980, U.S. billionaires’ tax obligations, as measured as a percentage of their wealth, plummeted 79%.
- Right now, the richest 20% of U.S. households own a whopping 90% of the nation’s wealth.
That’s the big picture … the wealth gap we’ve been talking about here.
When it comes to the rich getting richer, though, it’s worth looking at the small picture, too.
As is always the case when the federal government starts writing big checks, insiders and industries with armies of lobbyists get paid … while everyone else gets left behind.
Let’s look at some of these “blood boilers” — and at what you can do about them.
When Washington Tries to “Help”
In late January, at least four members of Congress made timely stock sales after learning about the coronavirus in closed-door briefings … long before the government got straight with the American people about how big a threat Covid-19 would be.
Then, earlier this month, we learned that small-business owners are finding it almost impossible to cut through the red tape in order to receive coronavirus relief packages. Meanwhile, dozens of public companies with access to capital markets were able to rack up $10 million loans from a federal program that was billed as emergency funding for small businesses.
In all, 220 public companies applied for at least $870 million in loans from the Paycheck Protection Program (PPP) — and real small businesses were told the money had run out.
We didn’t need academic proof of this program’s malpractices – but we just got it anyway.
According to a paper from researchers at the Massachusetts Institute of Technology’s Sloan School, the National Bureau of Economic Research, and the University of Chicago’s Booth School, only about 15% of companies in the regions most affected by Covid-19 received funds from PPP’s first tranche. In areas hardly hit by the coronavirus, nearly 30% of companies got what they were looking for.
“We find no evidence that funds flowed to areas that were more adversely affected by the economic effects of the pandemic,” the paper’s authors wrote.
At the same time, you can find plenty of outrages outside the small-business portion of the multitrillion-dollar stimulus packages rolling out of Congress.
Sure, key industries that got knocked on their butts due to Covid-19, like airlines and agriculture, deserve some billions. But dying businesses like shale oil are getting their unfair share, too, and so are highly endowed universities and arts programs.
Back to the big picture, the Federal Reserve is printing money again — implementing very large and aggressive quantitative easing (QE) programs — in order to prop up Wall Street.
Meanwhile, middle-income Americans — if the IRS can find you — are getting $1,200 apiece.
It’s the same as it ever was…
Dealing With the Wealth Gap
Here’s the thing…
You can’t do anything about the huge and growing wealth gap, or Washington and Wall Street’s crony capitalism. Sure, you can write your senator, or sign a petition, or … I don’t know, get drunk and shake your fist at the sky. But do you think that’s going to change anything? Washington is going to be Washington and Wall Street is going to keep acting in its best interests.
Meanwhile, Silicon Valley is going to keep “disrupting” the status quo. It will keep destroying established business and entire industries by creating game-changing new technologies.
The rate at which these huge disruptions occur will only speed up thanks to the coronavirus.
And the wealth gap will keep on widening.
When you compare the average net worth of America’s lower class, working class and middle class to the net worth of the top 10%, it’s like comparing a tiny office building to the Empire State Building.
So instead of trying to stop the misdeeds of Wall Street, Washington and Silicon Valley, you want to make sure you’re on the right side of this “Technochasm.”
The Technochasm can be a frightening story – but once you come to understand how the wealth gap works, this concept can help investors make a lot of money.
P.S. If you pay attention to the news, you might think the coronavirus and the horse race between Joe Biden and Donald Trump are the only big stories out there. However, the media is totally missing what is by far a bigger election year story.
You see, an alarming new trend taking shape in America is making a lot of people really wealthy… and at the same time making others poorer. I believe this will be the No. 1 factor affecting your money over the next few years. If you haven’t seen this or heard about what’s happening in your hometown, I strongly encourage you to learn what’s going on. I can show you exactly what’s happening.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends … before they take off. And when it comes to bear markets, you’ll want to have his “blueprint” in hand before stocks go south. Eric does not own the aforementioned securities.