The Fed Has Diagnosed the Trend of Global Impoverishment
WASHINGTON, DC – February 5, 2019
According to the Federal Reserve, the US economy is experiencing a deterioration in lending conditions, while the demand for bank loans is declining.
This is evidenced by the results of the Fed's January survey on the credit market for the fourth quarter of 2018, published on Monday, February 4.
According to a Senior Loan Officer Opinion Survey, US banks generally tightened the terms of lending to commercial real estate in the last quarter of 2018.
Over the last three months of last year, the United States also recorded a decline in demand for loans from companies and individuals.
The survey also raised questions about the expectations of US banks on the dynamics and terms of lending in the US economy in 2019.
There is a conclusion that in general, banks expect tougher lending conditions, lower demand and a deterioration in loan servicing in most loan categories.
In terms of business lending expectations, a small group of banks announced that it expects tighter lending conditions for commercial and industrial loans for small, medium and large companies. A significant share of banks expects tighter lending in commercial real estate for small, medium and large companies. The surveyed banks also expect lower demand for all business loans.
The survey was conducted from December 21, 2018 to January 7, 2019 among 73 US banks and 22 branches of foreign banks in the US.
Fed Chairman Jerome Powell at a press conference following a meeting of the Federal Open Market Committee (FOMC) on January 30–31, 2019 also noted a deterioration in lending conditions in the US economy. It is likely that the Fed leadership has decided to keep interest rates at the same level and hint at the potential completion of the interest rate increase cycle, including taking into account the information and forecast estimates of this review.
What does this mean for the common man? It means that the world is confidently entering an era of economic and political turbulence. You can see it with your own eyes. Yes, you probably see and feel that your life is changing radically and that it’s impossible to live as before. You are not alone in your feeling--it is shared everywhere.
The old economic model based on the expansion of the US dollar has come to an end and is collapsing. There will be a separate article about the causes and consequences of these processes. But what matters is that everything collapses, including usual business models, marketing, sales, etc. Most of the existing business models were focused on the middle class, on people with typical consumer behavior. Roughly, this behavior can be described as buying just what you want at the same time on credit. Such consumers are the majority of the population.
The middle class was created 40 years ago through the stimulation of consumer demand. That is, people could maintain a certain level of consumption not on their own, but on borrowed money. This model is over. No more money. No loans. Debts are unforgivable. The middle class is automatically transformed into a class of new poor, when consumer habits are still there, but the opportunity to consume as before no longer exists. And that with this to do no one knows. There are no alternative models. No one understands how to work with consumers who have no money.
Therefore, today the key task is to create mechanisms for finding consumers who might be interested in your product. Hence the panic of politicians and business. Hence the desire to control social networks and spy on potential consumers through smartphones, laptops and TV cameras.