Volume 8, Issue 18
Governments at all levels and businesses are now beginning to think through operations as burdened by the ongoing coronavirus pandemic. It is very difficult to cast one’s vision to the new Reset until current circumstances of public safety are stabilized.
However, it is necessary to keep our eye on critical markers not to be ignored on the road to recovery to avoid a point of no return and limited options. These markers fall in three general categories: supply chain maintenance, the effects of workforce narcotics, and management of sovereign nations’ debts.
Supply Chain Maintenance
The importance of maintaining the supply chain was discussed in detail in the Nuttle Report of April 21st. Keeping the supply chain intact can mean the difference between recovery and a recession slipping into a depression. Once the supply chain is broken, it is very difficult to reconstruct. This is because several variables are involved that must come into alignment at the same time for the members of the supply chain to function in unity.
So far, the federal government rescue packages have targeted funding for small businesses, large businesses, cities, and states. In theory in the short term, these funds should reach all elements of different business in different supply chain matrices. What is also required is for the economy to be engaged. A car can be maintained without starting the engine. But a supply chain must be operational to secure the position of the participants in alignment. When an economy is idle too long, the supply chain cannot be restarted in unison. It must be rebuilt.
Effects of Workforce Narcotics
The current rescue package passed by Congress provides $600 per week per worker filing for unemployment. This federal benefit is in addition to state unemployment benefits. Combined benefits in certain households are already resulting in a disruption of the workforce. Some individuals are electing not to return to work. Temporary service businesses are particularly impacted. Direct checks from the government are like a narcotic. It changes one’s attitude, one’s behavioral decisions, and can become addictive. This federal benefit is scheduled to sunset on July 31st. In a Presidential election year, there will be pressure to extend it to the end of the year. The longer an individual relies upon a weekly free check results in a direct correlation of a certain percentage moving onto welfare rather than moving back into the workforce when the benefit of the direct check expires. Twenty-two and a half-percent of the population is now on Temporary Assistance for Needy Families (TANF). Welfare and food stamps programs can be indefinite. The benefit was intended to be temporary. When it becomes generational, it can become a way of life.
Management of Sovereign Nations’ Debts
The United States government is on course to issue an additional $6 trillion in direct public debt as result of business needs caused by pandemic economic interruptions. Analysis now projects debt-to-GDP of the United States to be 135% by then end of 2020. Much as been written about the cause and effect of excessive government debt. Very little has been discussed academically on of the cause and effect of excessive U.S. government borrowings on the finances of other sovereign nations.
When governments borrow against the GDP of an economy not yet fully recovered, deflation is the result. This means that debt is harder to repay with more expensive dollars. The U.S. dollar is the world’s reserve currency. India, Brazil and Mexico have large debts denominated in dollars. In reality, the U.S. Federal Reserve is the world’s federal reserve. Actions taken for monetary policy fundamentally impact the world’s commerce. Consideration must be given for the cost of world debt denominated in dollars and the effects of deflation on sovereign debt servicing of other countries besides the United States.
What may be required is a meeting of the G-20 to address the single agenda item of worldwide debt restructuring.
These three markers have timelines that are fast approaching. They are three weeks, three months, and three years. The supply chain will begin to crack within an additional three weeks of being idle. Phase one of reopening hopefully will address this critical economic need.
The workforce narcotic will start to take hold if the weekly federal paycheck is extended beyond July. Three months of a new normal can become habit-forming. Narcotics have different effects on different people.
Sovereign nations normally can renegotiate government debt. Now the size, scope, and collective excess of world sovereign debt will necessitate a world plan for global debt management. History of economic cycles would indicate that, three years from the ultimate point of the final decision for the total restart strategy, circumstances will present a debt wall day of reckoning if the debt is not addressed.
Lance Wallnau defines the current crisis facing America as her fourth crucible. A crucible is a trial by fire that challenges the very character, commitment, and definition of a country. America’s first crucible was the Revolutionary War. The second crucible was the Civil War. The third crucible was the combination of the Great Depression and World War II. The pandemic is now America’s fourth crucible. I agree with Lance that America has had distinct tests of character. The first three crucibles were recognized at the time of having been caused by mankind or the evil in mankind’s heart. In each one of these crises, we fought to right the wrongs of unrighteousness. Defeating the evil was the construct for the restart, protect freedom.
In this fourth crucible, the pandemic is, at this time, perceived to be a natural disaster, not of mankind’s doing. Therefore, the test of our character is even deeper in that one must search the heartfelt bedrock of one’s own values. For our resolve must not just be to defeat coronavirus, but to Reset society in the aftermath, pursuant to a vision of eternal values.
We must be vigilant in observing cracks of thin ice present in the fourth crucible. It is imperative that we take note of their markers while keeping the same vision of values as our beacon as we did in the first three crucibles. Therefore, by remaining true to our county’s founding principles, we meet the test of the crucible in strengthening our national character.
May God grant us wisdom.
My name is Marc Nuttle and this is what I believe.
What do you believe?