SocietalPressure Cooker

Americans’psychological immune system has been deleteriously degraded with never-ending,elevated stress after two years of lockdowns and restrictive movements. Thenightmare continues in a different form seamlessly after the easement of pandemicrestrictions as re-openings and greater freedom of movement have been greetedwith a sudden NASA-trajectory of hyper-inflation.

Explodingcommercial and personal debt has resulted in more business closures, morelayoffs, more unemployed and more under-employed citizens who must purchasebasic essentials with credit cards that are approaching their credit limits.

Theever-shrinking middle class with good paying jobs, solid savings and reasonableliving expenses, have fallen into poverty or who are teetering on the cusp ofbankruptcy while the underclass is further burdened by subprime loans withrising usuary rates. In sum, the citizenry’s desperate efforts are not tomaintain their pre-pandemic lifestyle rather to survive and prevent homelessness.

TheFed’s policy efforts in utilizing all the tools in their toolkit are failing toarrest this economic downfall fueled by hyper-inflation. It’s a road toperdition with no off ramps or even air bags for the economy. Bad things happenwhen things break - like the system.

Forthis reason, the perfect toxic brew is in place to trigger a social powder kegthis summer going forward, an economic sinkhole that will make even law abidingbut psychologically and financially exasperated citizenry far more tempted toengage in desperate activities. Even Mother Nature is getting in on the “action”such as blowtorch summer temperatures, increased storm activity and watershortages serve as accelerants for violent encounters.

Fromthe law enforcement perspective, their assessment of potential troublemakers willchange accordingly with a mindset akin to the prescient sci-fi classic “TheMatrix” in which anyone can be an agent. It wouldn’t be shocking to see thesoccer mom wielding a shotgun backing up by her partner-in-crime, the formerlymild-mannered, recently laid off accountant husband desperate for food and cashfor their kids. The demographic to commit crimes for survival, not profit, isfar wider and deeper than ever before.

HardNumbers, Harder Life

Thefollowing series of charts provide an unpalatable wide-ranging view of howhyper-inflation is crushing wallets and spirits throughout the country similarto a disabled submarine sinking past their depth tolerances into the oceanblackness.

Thefollowing chart entitled Financial Woes on the Risein the U.S.provided by Gallup, compares Americans’ financial concerns pre-pandemic andpost-pandemic for the years 2019 and 2022 respectively:

Literallygetting to the meat of the matter is your quintessential American comfort foodin which the hamburger serves as a pie chart entitled How Inflation Changed thePrice of a Hamburger provided by the Bureau of Labor Statistics indicates an April2021-April 2022, year-on-year, comparative price change for various food items.

Forthose fortunate Americans who were in the enviable financial position to buyresidential property, the spike in mortgage rates have discouraged many frompursuing the American dream of owning a home as indicated by the followingchart entitled U.S. Mortgage Rates Surgeto Highest Level Since 2009 provided by Freddie Mac.

Furthermore,for those recent graduates, homeownership may be an impossibility because of theonerous burden of student loans which “haunt” even the highly paidprofessionals into middle age. The following chart entitled Americans Owe $1.75 Trillionin Student Debt provided by the US Federal Reserve. In a nutshell, student loan debthas tripled in the last 15 years.

 Abreakdown of household debt per the US Federal Reserve of New York is providedin their May 20, 2022 press release entitled Total Household DebtIncreases Q1 20022 Driven by Mortgage and Auto Balances.

HouseholdDebt and Credit Developments as of Q1 2022

Accordingto the Federal Reserve of New York household loan delinquent payments (morethan 90 days outstanding) across all categories have actually decreasedsomewhat except for student loans which rose slightly. This is a laggardindicator because the data does not reflect the most recent interest hikes.

Inan attempt to control inflation the Fed plans to raise interest rates furtherthrough 2022 into 2023. These rate increases will be particularly acute forsubprime borrowers who are mostly nonwhite and puts them in a double bindwhether to spend their inflation ravaged income on rent/mortgage and foodbefore paying loans.

USConsumer Costs vs The World

Thefollowing two charts provide a visual comparative perspective of how Americansdeal with increasing costs vs their foreign counterparts elsewhere in the worldunderscoring the fact that these financial struggles are felt globally andinevitably the civil unrest to follow.

Thischart is entitled How Gas Prices CompareAround the World provided by Global Petrol Prices. It’s best to make comparisons with similareconomically developed countries because the taxation rate can vary considerably.

Manyoil-producing countries with autocratic governments and are heavily subsidized suchas Venezuela, North African, Saudi Arabia have far lower gas prices. On theother hand democratic yet economically socialist Norway whose oil production ismore than sufficient to meet domestic demand thus exports a considerable amountof their production, still has onerous tax rates.

Finallythe following chart entitled Inflation Woes Abound inDeveloped Nations provided by the organization of Economic Co-Operation and Development (OECD)presents how hyper-inflation is becoming an unrelenting beast.

Conclusion

Present-dayinflation is just lifting off the launch pad and soon to enter hyper-drive.This trajectory is not a temporary inconvenience rather threatens to triggerhistorical social discord manifesting in long-term social unrest justifyinggreater governmental control over American freedoms such as emergency measures,which, if not already conveniently codified, certainly will be.

© Copyright 2022 Cerulean CouncilLLC

The Cerulean Council is a NYC-basedthink-tank that provides prescient, beyond-the-horizon, contrarian perspectivesand risk assessments on geopolitical dynamics and global urban security.