BURDENED BY WHAT HAS BEEN

Early in my legal career, I represented a high-security prison that wanted to suspend, for six months, a guard who, while bored and sitting alone in a watchtower one night, took his shotgun and blasted a hole in the wall.

While the guard claimed the shooting was accidental, the gun’s safety was shown to have been intentionally disengaged. At the end of a half-day hearing, the judge concluded that the guard had violated work rules. But instead of suspending him for six months, the judge concluded that the guard’s already-served one-month suspension was sufficiently punitive.

The guard, whose name and appearance I remember but won’t include or describe, walked over to me, smiled sheepishly, extended his hand to shake mine and said, as did Shakespeare:

“All’s well that ends well.”

Ultimately, the guard made a fair point. While he had done something stupid, it didn’t cause lasting harm. No one was injured. The wall was easily repaired.

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While redemption and fresh starts are common, sentimentally appealing cinematic themes, real life doesn’t always clearly demarcate the past from the present and the future. The next chapter isn’t always written on a clean slate.

Even before the Scamdemic, many lamented American economic stratification and the shrinking middle class. The media, politicians and protest singers often voiced this theme.

But the Covid overreaction further enriched America’s already rich. The Scamdemic facilitated the biggest, most regressive, wealth transfer in history. Consequently, America’s middle class has lost significant purchasing power.

Various official data confirm this trend. But throughout the Scamdemic, I’ve de-emphasized government, hospital and Pharma statistics. So many of the “official” numbers have been unreliable: they’ve been based on misleading definitions, dubious data collection methods and plainly, deliberately flawed analyses. Besides, no later than late 2020, everyone but the most Covophobic had overdosed on graphs and case and death tickers.

Thus, instead of relying on government stats and charts, I’ve directly observed my daily realm and, as below, use non-governmental figures less subject to distortion.

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In the demagogic name of saving grandma—though in reality, more grandpas than grandmas died and the vast majority of grandmas and grandpas survived—Congress, Trump, Biden and The Fed contrived at least $5 trillion (some say much more) of “Covid relief,” which they bestowed on bureaus, states, favored businesses and individuals.

None of this inflationary boondoggle saved lives.

Much of this money was funneled through banks or to people or entities who didn’t need it. These dollars had to be put somewhere. Much of it was spent on stocks, thus swelling stock prices. If you owned or bought stocks in April, 2020 and held them over the past four years, you made, on average, a 122% profit. Stockholders more than doubled their money while they played pickleball, watched Netflix or slept. Once you have money, it’s easy to make money.

When, after running up over the past four years, the stock market lost 3% of its value in the past week, the media acted as if the sky was falling. Many urged the Fed to ease interest rates to avert a collapse, forgetting that rates were increased to quell the inflation spurred by the oversupply of dollars. Even without such a proposed, overreactive monetary stimulus, the markets bounced back within a few days.

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In contrast, if your income was derived from wages, not investments, and you had just enough money to pay bills, you made 1% on the small amounts in your savings or checking accounts; interest rates were kept low to “stimulate the economy.” It was odd that the government simultaneously put the economy in a coma with lockdowns and stimulated it. It was like washing down sleeping pills with espresso.

The sub-1% interest banks paid on savings accounts was far below the governmental 20+% CPI inflation rate. Given the items it includes and excludes, the CPI seems to significantly understate actual inflation you may have noticed when you went to buy food and other items. Even using the unrealistically low official rate, any savings you had lost at least 19% of their value. While the wealthy got wealthier via stockholding, middle class purchasing power dropped like a rock, as did the value of any savings. And the poor became poorer.

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If you owned a house in 2020, its value has increased sharply. The few houses for sale now fetch prices that would have shocked people four years ago. According to Zillow, my modest house gained $140,000 in value during that span; this 40% increase is seen nearly nationwide. Though of course, any house one might try to buy with sale proceeds would cost commensurately more.

Many pre-2020 home mortgage-interest-payers refinanced to 3% mortgages during the early part of the Scamdemic, when banks were looking for places to put dollars while public health bureaucrats and politicians locked stuff down. Homeowners with a 3% mortgage don’t want to move and take on a 7% mortgage; this has been roughly the prevailing rate as the Fed tries to quell Covid-theater-spending-driven inflation.

Therefore, many fewer people are selling houses and demand far exceeds supply. I see evidence of this where I live. While, for decades, most local streets had at least one single-family house with a for-sale yard sign, over the past three years, such signs are scarce. Pre-Scamdemic, my town’s Main Street real estate office typically displayed in its window more than a dozen photos of houses for sale at any one time. During the past few years, the window shows one or zero such houses townwide. Since 2021, I’ve gotten dozens of junk-mail postcard solicitations to buy my house for cash, as-is.

Given the combination of high house prices and increased mortgage rates, monthly home mortgage payments and other house carrying costs are, to many prospective, younger homeowners, unaffordable. It now costs the average person 43% of their income to buy the median house. This compares with a 28% historical average.

The overall cost of buying a house increased dramatically because house prices and interest rates have increased simultaneously. This is abnormal. Normally, there’s an inverse relationship between interest rates and home prices; when interest rates are high, housing prices drop. And vice versa. But because a homeowner’s monthly mortgage payment reflects both a house’s sale price and the monthly interest on the unpaid principal, the monthly carrying cost of houses has increased dramatically and exceeds most younger peoples’ ability to pay.

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Hedge funds or individual or group investors, who are flush with “Covid Relief” wealth, can buy houses outright, without borrowing. Thus, they can outbid potential home buyers who would have to service mortgage interest. I’ve heard that when people bid on one of the few available houses, they’ve thought they were winning the bidding war until another buyer—often a hedge fund or other investor—outbid them at the eleventh-hour with cash.

Without consulting official statistics, I’ve seen my home insurance premiums jump 50% in the past five years. Mortgage-lending banks require those who use loans to buy houses to also buy home insurance. But large, institutional investors don’t have to buy insurance. They have so much money that they can self-insure, i.e., pay out of their own pockets to rebuild in the highly unlikely event that one or a few of their investment properties burn down. This ability to self-insure gives housing investors another competitive advantage over individuals who pay, with borrowed money, to live in a given house.

Residential real estate investors rent the houses they purchase. Investors charge tenants more for monthly rent than the carrying cost of the house; it’s their profit margin. As they’re funding the investors’ profits, renters have less money to spend on housing than they would if they were paying a mortgage, insurance and taxes.

Further, rent payers don’t build home equity. While this effect is easy to ignore in the short term, it becomes very noticeable over a decade or two. Covid-dollar-fueled home investors are usurping what has historically been middle-class families’ main asset.

Scamdemic-spending-driven inflation, has caused rents to climb faster than have renter’s incomes. Thus, the rich have become richer, while inflation has sharply devalued middle class and renters’ savings. If you didn’t own a home in 2019, you’ll have trouble ever buying one. Unless the housing market crashes. If it does, investors can swoop in and buy up the bargains.

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Having fewer homeowners and more renters profoundly changes American society. A home is about more than building wealth. It’s a place people can adapt to their own needs and tastes and thus, live more comfortably. Further, having neighborhoods of homeowners promotes upkeep. Most people like to live on well-maintained blocks.

Home ownership also facilitates the formation of friendships and community better than do rental properties. My neighborhood is a mix of homeowners and renters. The renters don’t engage. They see no value in relationships with people they’ll move away from in a year or two.

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One’s economic status is largely relative to others’ status. After refinancing their mortgages in the early part of the Scamdemic, when interest rates were low, pre-Scamdemic homeowners now spend less/month on mortgages and taxes than many tenants spend on rent. Thus, as Substacker Peter St. Onge recently pointed out, homeowners can spend more for luxuries like travel and restaurant meals, propping up prices for those "lifestyle” sectors with their discretionary spending power.

Those in their twenties and thirties may never catch up. In the near term, they rely on credit to live the life they think befits their college-educated status. But borrowing is unsustainable, especially when credit card companies charge 17-30% annual interest.

Perhaps young people expect that the government will ultimately bail them out, as it did with Covid stimulus checks and unconstitutional student loan nullifications. Or maybe they’ll just self-anesthetize by buying more weed at dispensaries, like the five new ones in my town. And/or take prescription anti-anxiety meds or antidepressants.

The young have gotten badly hosed throughout the Scamdemic. They were deprived of many age-appropriate experiences and opportunities to meet others, including life-mates. But to some extent, Millennials and Gen Z deserve it for not seeing the collateral damage that lockdowns, closures and shots and the Covid spending binge would cause and for failing to oppose the mania. Their own virtue-signaling, conformity and passivity have hurt them badly during the past 53 months. Most still vote for the Democrats who sold them out; doing so is tribal and hip.

Tens of millions of “progressives” considered themselves “kind” science followers for supporting Coronamanic closures and spending. But they were simple-minded and short-sighted. They’ve facilitated a profoundly consequential, long-term transfer of wealth from the middle class to the rich and made it very hard for the young and economically marginalized to pay bills and build financial assets. They’ll feel these Scamdemic effects for the rest of their lives.

All hasn’t ended well.