10
10 Comments

U.S. banks say it's too dangerous to cooperate with giving loans to bail out small businesses

  1. 2

    The root cause of this problem is money printing - also called "bailouts", "quantitative easing", "bond buying", "helicopter money" etc.

    Say you are a bank and the government comes to you with two proposals: 1. we'll give you a small amount of money at the same interest rate as the market and a huge number of complicated regulations and strings attached (the proposal from the linked article); or 2. we'll print trillions of dollars and give it to you for free with no strings attached. Which one are you going to pick? Obviously 1 sounds like a difficult disaster and you're going to say to the government "Can't you make 1 more like 2? Then we can talk." That's exactly what banks are saying in this article.

    The mistake was made in 2008 and we're now at the sharp end of the stick they started whittling. Banks now literally can't do the job they were created for without suckling at the teat of government printing presses like giant tantrum throwing babies.

    Indie Hackers represents the opposite of the centralized money printers and their teat sucklers. We are the adults in the room who still believe in doing real work and bringing real value without taking on insane levels of debt. The ideas from this community are the antidote to the infantile economic madness gripping the world.

    As it all comes crashing down it is the people from communities like this, bootstrappers, who will survive and then reboot the economy. Indie Hackers are the gritty decentralized entrepreneurs the world is going to need the most.

    Hold it together people, it's going to get very messy.

    1. 2

      We are the adults in the room who still believe in doing real work and bringing real value without taking on insane levels of debt.

      ok please hack out a decent factory that produces real goods without taking on debt. It's easy to start websites/apps without capital, but that does't feed, clothe, or shelter people.

      1. 1

        Absolutely agree that it is hard to produce real goods without taking on debt (or IOUs to suppliers). That is why I said:

        insane levels of debt

        And not:

        any debt at all

      2. 1

        Debt is not money printing. Debt has been around for 5000 years. It predates hyper financialization by 4951 years ;). Interest is meant to be the coupon paid for borrowing your saved purchasing power so I can use it today.

        Why would I loan my capital to an entrepreneur when the banking cartel will front-run my investment with printed money at artificially low rates? Instead I will remove my capital from investment and seek safe haven in assets to prevent devaluation from coming inflation. I make more parking my money in gold and real estate (non productive assets) than risking it in a business for < 1% return.

        Printing money begets printing money. When the crisis hits the powers that shouldn't be turn to the very class of people that got us into this mess and do whatever they say, yet again. Why would the outcome be any different this time?

  2. 1

    In the UK personal guarantees were needed for business loans, but not any more. I think the government has ruled that it's not allowed in these times.

    1. 1

      I haven't read up enough on all the policies in the stimulus bill the US passed, but I keep seeing convincing reasoning for how it's not doing enough, e.g. this article which argues that the loans help stable businesses far more than those affected negatively by the pandemic. I wonder if it would've been more effective just to give individuals the money directly, rather than businesses.

      1. 1

        Even if you send individuals money, they won't be able to go out and spend it in order to keep small businesses in business. They will mostly just spend it on essentials online or at walmart, and stash away the rest in these times.

      2. 1

        That US unemployment graph I've seen flying about is scary.

        The government here has guaranteed salaries with a maximum payout of £2500 per month (I think) to employees who can't work. It doesn't fix things, but hopefully it will stop things collapsing completely.

        But what do I know. ¯\ _ (ツ) _ /¯

        1. 1

          You can't stop a tsunami. You can prevent a tsunami by building a sea wall before the tsunami happens. You cannot prevent it without any protection while it's happening. You can just bunker down and try and survive it. And be ready to pick up the pieces and build again when the water returns to normal.

          Only a fool throws his last remaining food and money into a hurricane hoping it will quench it so it stops. All you end up with is a hurricane and no food or money.

          Sure, keep people fed (that doesn't mean sending them money, that means providing food. EDIT: hey maybe you do sent them money. But you don't bailout the airlines!). Keep them sheltered (that doesn't mean forgive all mortgage debt, that means provide social security and public shelter for the homeless). But let the ponzi system fall.

          In the post 2008 bailouts Nassim Taleb said something like "Now, the financial system is too big to fail. Next crisis, it will be too big to save." Rather than allowing a smaller crisis last time we have let the mess grow bigger and more fragile. What if the cost of kicking the can down the road one more time is more than the entire wealth of the world? Is it still worth kicking it? Every time you kick it the can gets heavier. Will we break our foot on it trying to kick it this time?

        2. 1

          I just saw multiple companies' hiring statuses change from "currently hiring" to "closed till May 1st" within a matter of 2 hours. The job market is going in for a spiral that we haven't seen in recent years.

          BTW, the above mentioned companies have raised a decent round in the last few quarters. If they are panicking, I can only imagine bootstrapped or company's that are running on reserve.

Trending on Indie Hackers
How I grew a side project to 100k Unique Visitors in 7 days with 0 audience 55 comments Competing with Product Hunt: a month later 33 comments Why do you hate marketing? 29 comments My Top 20 Free Tools That I Use Everyday as an Indie Hacker 18 comments $15k revenues in <4 months as a solopreneur 14 comments Use Your Product 13 comments