Small Business Lending, Regulations, Banks, Non-banks
The most wonderful thing about Capitalism is that it is an extremely fluid and adaptive system. Contrary to centrally regulated economies, the mas number of independent entrepreneurs, inventors, innovators, business owners, executives and employees has always been very quick to find ways around the mess created by government regulations. This is why the collapse of Capitalism has been predicted several times in history. But, every time the creative entrepreneurs slammed it back on the faces of forecasters. The reason is that in centrally regulated Socialist or Communist type systems, it is much harder to overcome the red tape and inherent inefficiencies of government bureaucrats.
In the aftermath of 2007-2008 recession, many government crooks in so called financial experts and media were very quick to predict the downfall of Capitalism. Good news is that the constitutional freedoms and genius of entrepreneurs is failing them, again. Government, as usual, provided the solutions for regulatory failures as more regulations. A major drawback of so called post 2008 recession financial reforms like Dodd Frank and basel I – III has been that new restriction and regulations placed on Banks disincentivise and make lending to small businesses more expensive and risky. So, while big corporations continue to be very well funded, the small businesses could not find funding at any cost.
This is yet another example of how government regulations, backed up by corporate lobbies, create an uneven field for smaller competitors. On the other hand the fact is that the small businesses are fuel which runs our and any other major economy. These regulations and their costs make it harder for start ups to enter into competition and make the growth of existing small businesses nearly impossible, a guarantee that sold out politicians and corporate media provide to their bosses in lobbies. This is also a major reason for dismal jobs growth in post recession period.
Liberal media and politicians frequently blame businesses for stagnant wages. The real reason for stagnant wages is thwarted competition due to increased cost of financing and doing business. Due to government regulations the business growth and expansion is not as rapid as it should be, especially when compared to population growth. Since, business growth is slow, the jobs are being created at a slower pace, and because jobs are being created at a slower pace, and creativity and innovation of small businesses is being killed, the competition in job market is not growing at a desirable rate.
Less competition and more supply then demand in job market is bringing down the wages, since employers have no reason to offer higher wages and workers have no leverage to demand higher wages. Fortunately, we do not have bad news, only. American entrepreneurial ingenuity is rapidly finding, creating and growing alternatives to this regulatory deadlock. This is commonly and collectively called as non-bank financing. While offline growth is good, too, the Internet is becoming main hub for non-bank financing. As a matter of fact some of the government regulations are working against government itself and favoring entrepreneurs.
A very good example of this are artificially kept very low interest rates by Federal Reserve. Due to very low interest rates the yields on traditional saving and financing are very low. Saving accounts, money markets, bonds and government backed securities are yielding almost no interest, especially when compared to inflation and money devaluation. In most of traditional investments the investors are actually losing money, as the inflation is higher then yields. So, the frustrated investors are actively looking for options in order to be able to appropriately save and invest. Investment in non banks financing seems to be a much better alternative for most of them.
Non banks financing institution can easily be searched online. There are several types of those already in place. Crowd funding and peer to peer lending are very good examples of it. On the other hand these alternative lending avenues are providing critically needed funding small businesses, improving competition, creating jobs and holding a true promise of wage growth in future. So, by investing in this type of financing you are not only getting a far better return on your own investments, in this way you are actually helping small business owners, improving economy, creating jobs and helping to elevate the standards of living for your fellow Americans.
Trust me, all the tax payers financed stimulus and rescue packages and Quantitative Easings are just getting dumped into big banks and big corporations, only. No of us and small businesses have got any benefit from those, and are not likely to get any in future. As usually, you cannot count on government, at all. The struggle has always been about we citizens holding and raising each other in difficult times. This is what got us through Great Depression, recessions and wars. This what always going to help us get up, again and start running on our own feet.
I do not care, what media pundits and politicians are telling us. The only way to get out of this too much government mess is to break down credit crunch and make money and capital start flowing, again. Government has never done this, and it is never going to do this. We have to find out our own way out, to help each other. So, say to government, “Screw you”, once again and get on your own feet. We are the ones who created the world’s largest and richest economy within two hundred years, we have always run it, and we will keep it going.
American dream was not created by government and it cannot make it materialize. It is our dream and we will prove that we own it, and we know how to materialize it. It is our money, our efforts and hard work, and our entrepreneurship which has kept it going, and which will keep it going, always. Let us show to the world, once again that we are the greatest nation and country, ever, and we truly know, how rise back from our own ashes. We do not seek the solutions in government programs. We create our own destiny and our own roadmap.