The world has been getting more bipolarized since the outbreak of COVID-19

COVID-19 has fundamentally changed many aspects of our lives. Some of them may be temporary, such as working from home (as we are getting back to office) and wearing masks (as we are vaccinated).

 

However, the following mega trends, primarily inequality, are here to stay even after humanity triumphs over COVID-19 in the future.

 

1. Wealth inequality between the rich and poor

As previous article on this issue has pointed out, the gap between the rich and poor has wildly increased since COVID-19.

 

This is because the Federal Reserve System has initiated another round of quantitative easing which has enormously surpassed the previous round during the Global Financial Crisis in 2008.

 

While the intention was to help the economy and give money to where it is really needed, much money has been soaked up in the financial and property market, which drove up the price of stocks and real estates.

 

Now the wealth inequality between those who had and have been holding onto these assets and those who have not is even greater than before, and this gap is causing social unrest and discontent throughout the world.

 

2. Wealth inequality between the US and emerging countries

As the US pumped out more US dollar into the market historically, the easy money flew into other emerging markets and propped up their finance and property markets.

 

However, whenever there was a reversal of easy money by raising the interest rate in the US, countries like Brazil and Turkey have suffered as US dollar flew out of these countries.

 

What is happening right now is that an indication of tapering (opposite of quantitative easing, getting money back from the financial market) from the US is causing another wave of exodus of easy money from emerging countries.

 

The US is getting back to normal economy after COVID-19 with vaccination, but the aftermath of normalization is another round of adversity and wealth gap for emerging countries.

 

3. Wealth inequality between generations

The debt load has expanded massively, as explained in this previous article. Where is this forever increasing debt leading us to?

 

Private debt

General government gross debt

 

One thing is fore sure: It is dividing another wealth inequality between the current generation and future generation.

 

The current generation enjoys very little to no interest rate payment from these debt loads, and they only have much to live with them. As the debt becomes unsustainably large, however, the future generation will be burdened with much large principal and interest payment from their ancestors.

 

Conclusion

These mega trends are all byproduct of the COVID-19, and are here to stay even after COVID-19 is fully vaccinated. Only time will tell which direction inequality between these different entities will go.

 

But it seems that it is likely to get worse than get better, because the current capitalism system has never experienced such phenomenon before and may not know well how to deal with it.

 

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