Another black swan in America's future?

The U.S. has had a slew of black swan events of late.  For the purposes here, I'll define a black swan as having the following characteristics.  First, it disrupts the equilibrium of society.  Second, it is not commonly foreseen, and, if discussed at all prior to happening, it is discounted as highly improbable.  Thirdly, in retrospect, the black swan seems to have been inevitable.  I'm sure Nasim Nicholas Taleb would not object to such a description.

In chronological order, the black swans we've experienced in just the past five years are: 

1) the surprise election of Donald J. Trump in 2016,

2) the Chinese-induced pandemic and the anti-science response of most government officials to it, 

3) the acquiescence to and even open encouragement of the Antifa and BLM riots in the summer of 2020 by large segments of the Democrat party, and 

4) the boldness and success of the election coup of 2020. 

Each of these in its own way permanently changed the country.  Of these four, only the first one — the election of Donald Trump — had a positive effect.  The other three left America seriously damaged.  Given the shape of the country, what has already transpired, and the deep polarization within society, there are more potential black swans on the horizon.  The one I'd like to focus on is the financial shape of the government.

The current U.S. federal debt is over $27 trillion for a country with a GDP of $21 trillion.  This is more befitting countries like Greece and Italy than the United States.  And each year, our illustrious government continues to spend trillions more than it takes in.  The budget deficit in 2020 it was $3.7 trillion.  This year, the deficit is projected to be $2.3 trillion of additional debt.  We have debt piled upon debt, yet the geniuses in Washington are intent on shoveling even more fiat money out the door.  Few in Congress appear concerned about this, as there's no serious debate on the issue.  It's as if deficit hawks have gone as extinct as the dodo bird.

What makes this situation even worse is that since the spigots were opened in 2008, most of the newly printed money went to billionaires, Wall Street, bankers, and the crony capitalists connected to government.  Since mid-March of last year, while Main Street suffered economic pain from the Chinese flu lockdowns, the wealth of U.S. billionaires grew by whopping $1.3 trillion.  Here is how the top five fat cats made out in terms of wealth increase and as a percentage growth in their wealth during this past year of pain: 

Jeff Bezos — $76.3 billion (67.5%) 

Elon Musk — $158 billion (642.4%)

Bill Gates — $25.7 billion (26.2%)

Mark Zuckerberg — $41 billion (75%) 

Warren Buffett — $24.2 billion (35.8%)

How can this be justified?  It can't.  What it shows is that the government and the Fed are more concerned with rewarding the top 1 percent than they are the ordinary Americans.  And what's their argument?  That the trillion-dollar gain in the wealth of billionaires will somehow trickle down to ordinary people? 

Maybe the free-market purists at places like the National Review defend this as capitalism in action, but I call it corruption of the highest rank.  The future of America has been sold for a bowl of porridge.  Funneling trillions of dollars to financiers, "woke" corporations, billionaires, and others of that ilk is no way to hold a society together.

Financially, America is in a Bizarro World in which deficits and debt don't matter, real interest rates are negative, yet the stock market climbs to record heights.  A financial day of reckoning is due . It can happen at any time.  It could take the form of the dollar losing its position as the world's reserve currency, it could be a massive stock market crash, or it could be runaway inflation or a depression.  Any one of these would be a major black swan event catching a large majority of people by surprise.  Given the polarized state of the country and the lack of trust in government and other institutions, anything can happen then.  Anything.

Image via Pxhere.

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