Tag Archives: Social Issues

The Connection between Social and Economic Volatility

Many acts of violence have occurred (and continue to occur) across the country, and financial expert Dawn J. Bennett believes they can be tied to the economic volatility America is facing. Shortly after Independence Day, police officers fatally shot two unarmed black men. On one occasion, a man was shot and killed during a traffic stop, and his partner filmed the aftermath of the incident, as her four-year-old daughter sat in the back seat. As a result of these killings, protests erupted across the country. At what began as a peaceful protest in Dallas, a military veteran killed five police officers and injured seven more, making it the deadliest single incident for police since 9/11.

Dawn J. Bennett, founder and CEO of Bennett Group Financial Services, says this social unrest is connected to the economic volatility the nation is facing. The current situation can be summed up by this quote from Reverend Al Sharpton: “When people wake up in the morning trying to figure out how they’re going to pay their bills or how they’re going to put food on the table for their family, it leads to an anxiety that then leads to bad judgment and bad choices.” According to Bennett, income inequality, wage stagnation, and economic insecurity all play a role in forming the current explosive landscape.

In terms of the economy, “even the Federal Reserve has recently admitted that the stock market is effectively in bubble territory, saying that forward price to earnings ratios for equities have increased to a level well above their median of the past three decades. Of course, the Fed is doing nothing about that fact, and likely won’t until the bubble bursts,” says Bennett.

Bennett points out that the nation is already facing a recession by a variety of measures. Some of these measures include:

  • The corporate bond market, labor markets, and inventory accumulation are all recessionary.
  • Corporations are more leveraged now than they were in 2007.
  • Earnings have declined to 2011/2012 levels, while the stock market continues to hang around record-highs.
  • Gold rose from $1060 in January to over $1360.
  • Silver increased from $13.90 to $20.

“Zero or negative interest rates, combined with huge amounts of cash being pumped into the markets, led us into an extreme fantasy land, causing a speculative frenzy,” says Bennett “However, the central bank tide that has raised all the boats of our markets feels not only like it’s about to recede, but even completely dry up and leave the boats sitting on sand.”

She continued, “The mismatch of economic cheerleading from the Fed and the White House with the reality of poor job security and prospects, underfunded pensions, and mandated health care that’s simply not working can only contribute to social unrest.”