U.S. Economy: What the Beggar Told Me in San Francisco

US_EconomyThe great thing about my job is that I get to travel different places in the U.S. and around the world to gauge how various economies are faring, my interpretation of which I pass onto my readers. My recent trip to San Francisco last week was a real eye-opener.

With San Francisco only 40 minutes away from Silicon Valley, one would think all the money the geeks are making in tech heaven is making its way into San Francisco. Yes, the money is making it into the city. The top restaurants I visited were all very busy; you need to form in a line even if you have a reservation. And real estate prices in the Pacific Heights area of San Francisco are booming again.

But we need to remember that the easy money policies of the Federal Reserve have made a very miniscule part of the population—the rich—richer. They have left the poor, the fastest-growing segment of the U.S. population, poor or even poorer.

Low interest rates since 2008 have pushed risk-averse investors into the stock market. And that has made it easy for Internet-related companies with an idea, a little revenue, and no earnings to sell their wares to those who invest in the stock market.


And for those 30 or so Internet companies that have achieved real profitability, low interest rates have made it possible for those companies to borrow money to buy back their shares from their shareholders and, of course, from their corporate insiders as well, who have plenty of stocks to unload.

But those easy money policies have helped a very, very small portion of the economy. A Silicon Valley tech millionaire isn’t helping the economy when he or she buys an expensive home in San Francisco. Sure, the real estate agent makes commission. Maybe the mortgage broker makes some money, and maybe a high-end furniture store will sell some expensive sofas. But isn’t that “already well-to-do” people just moving money amongst themselves?

If we look at the bigger picture, the Internet has taken jobs off the table for the U.S. economy. How many jobs has Amazon.com, Inc. (NASDAQ/AMZN) taken away from the retail sector? I can bet it’s not equal to the jobs they have created.

Back to my beggar story… Homelessness is a huge problem in San Francisco. Depending on which report you believe, there are between 7,000 and 10,000 homeless people living in San Francisco. What really hit me on this most recent trip are the homeless moms and their babies.

I saw homeless moms lying on cardboard with their babies in their arms, begging for money to buy food. They were real babies. How can this be? In what hospitals were these babies born? How are they being fed? This is happening in America?

The beggar said to me, “Please, I need to buy food for me and my baby.” What do you do in that situation except hand the lady $20.00 and walk away until the next beggar, only 20 feet away, hits you up again?

I’ve never seen so many beggars in San Francisco. What the beggar really told me: to the politicians, who say the economy is getting better, take the time to walk the “streets of San Francisco,” where the reality of America really hits you.