I hear from business owners daily who are dealing with this issue. Inflation has increased just about every input cost they have from energy to payroll without the same access to affordable working capital in the form of commercial loans. Banks are pulling back from lending while, at the same time business revenues decline due to consumers' pull-back.
"Perhaps consumers are hitting a proverbial brick wall after two years of negative real wage growth forced many to draw down on personal savings and rack up record amounts of credit card debt in the highest interest rate environment in decades -- all to make ends meet."
Meanwhile, banks are going through convulsions as the hemorrhaging of deposits continues and they need to keep drawing down more stimulus from the Fed to stay afloat. The Fed has gifted the larger banks B-illions(!!) of taxpayer money but they simply hoard the cash to bolster their balance sheets because THEY. ARE. ALL. INSOLVENT. It doesn't matter how much the Fed prints, it's not nearly enough to cover the gaping hole in the American economy.
"Keep in mind that the fiat stimulus measures of central banks and the interest rate policies of global bankers are what caused the current economic crisis to begin with. It wasn’t covid, it wasn’t the war in Ukraine and it certainly wasn’t climate change. It was the banks and their use of monetary manipulation that triggered 40 year high inflation, and this has led to central banks hiking interest rates into economic weakness. This strategy has consistently caused debt implosion and stock market disasters in the past. The bankers and the globalists are the source of the problem, they should not be put in charge of fixing it."
"using deposit data that is updated weekly from the Federal Reserve’s own H.8 releases, it becomes crystal clear that the large banks are bleeding deposits at the fastest pace in 40 years."
Even when they show really, REALLY obvious preference to the big banks like Morgan Stanley/CHASE by giving them a GIFT called 1st Republic Bank, it's not even enough although it does show us where the priorities of our financial officials lie.
"JPM reported earnings which, as expected, trounced expectations primarily on the back of generous contributions from the First Republican FDIC/taxpayer bailout-cum-gift, which has helped push the bank's net interest income that much closer to a mindblowing $100 billion."
The crisis is this: Consumers buying things make up the vast majority or our country's economic activity, like 75%. With price levels where they are now, most consumers have to cut something from their regular expenses to make ends meet. As those cuts work their way through the supply daisy-chain there will be reverberating cuts all they way down the line. Businesses will have to make the same downward adjustments and so on as a cascading series of reductions, layoffs and general regrouping efforts play out. Furthermore, banks aren't lending and hoarding their capital because of deposit flight which is logical; why keep your funds at 0% when you can get over 5% buying a short term treasury. That is, the federal reserve is devastating bank deposits by offering 5 times higher interest rates while, at the same time bailing the struggling banks out with money they "create" using mouse clicks.
The signs of consumer distress are everywhere and many of the costs simply cannot be avoided such as insurance and groceries.
"On Wednesday, the Bureau of Labor Statistics published June's latest Consumer Price Index data. While US annual inflation cooled to 3% last month, a sub-component of the index, car insurance rates, soared 16.9% year-over-year, taking out pandemic highs."
"Even though used car prices are coming off highs and tumbling, the cost of operating a vehicle remains elevated, if that's filling up the gas tank, paying for insurance, and or repair costs, the whole American dream of affording a car and home is becoming more and more unattainable."
For owners this is a difficult time to plan and implement strategy. Access to affordable capital in a timely manner is critical to the growth and well-being of all businesses and that is where I come in; call me to talk about your plans and needs. I always return messages.
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