I don’t normally comment on political issues but after seeing several articles in the Washington Post I had to say something. What’s even odder is the Washington Post had two articles that basically said the same thing, that the Feds quantitative easing (Learn what Quantitative Easing is: QE3 Explained) was a good thing for the economy and small business. What’s even more amusing is that after a few dozen comments appeared from small business owners, who overwhelming disagree that lower borrowing cost were important, the Washington Post buried the articles on Bernanke’s quantitative easing. Here are the articles:
Washington Post: Fed action a welcome move for small business?
Washington Post: Small business owner QE3 is a good start but hardly enough.
I deal with small business day in a day out and what I see is a totally different picture. Business are facing a double edged sword, dropping sales and increasing cost. Small businesses are not looking to increase borrowing there are looking to reduce borrowing, because sales have dropped. They are not only cutting their borrowing they are cutting cost where ever possible and this means jobs and any other cost they feel they can cut, ie advertising, benefits, discretionary spending, etc. Only a fool would borrow more when your sales have dropped, it’s a recipe for disaster. I know many business gurus’ advocate spending more on advertising when sales drop but this is different, the drops people are seeing are much larger than those due to sales dips from perhaps a new competitor, the drops are across the board and deep. In addition costs have risen sharply, as in my case and many others due to increases in fuel and raw material cost.
The authors obviously did not interview any small businesses for these articles. I own a small business and borrowing costs are not the issue, it’s the rising inflation caused by these stupid Quantitative Easing’s. Don’t believe me then walk into a supermarket and ask any regular customer what has happened to prices. The government excludes the two most volatile components from inflation calculations, energy and food costs. Housing is included in the calculation and since it has dropped it has made the inflation figures look like deflation… Every time we do quantum easing it devalues our currency and since we import so much stuff (including oil) we have to pay more for everything.
I track my expenses very accurately and I have cut cost relentlessly to get through these hard times but I am fighting a losing battle as fuel cost have taken a bigger and bigger chuck of my expenses. I have even altered my business to try and get customers to use remote services (I do computers and networks) for small jobs but it is a tough slow sell. I am not the only one finding things difficult. Every small business I deal with is seeing profits erode despite cutting costs because of rising raw material and fuel cost. Bernanke needs to go, he has no clue!
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