The Fed Means Business

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Written by Wade Henderson

Friday, 20 March 2009 19:00

When the Fed said that they were going employ all available tools to promote economic recovery and to preserve price stability they were not kidding.

by WadeHenderson

When the Fed said that they were going employ all available tools to promote economic recovery and to preserve price stability they were not kidding.

As stated in the Wednesday March 18, 2009 edition of the NY Times:

WASHINGTON " Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.

If the Federal Reserve keeps up its attach on the recession the days until we start to see a recovery will come sooner than many economists predicted.

In September 2008 the Central Bank had $900 billion on its balance sheet and now we are nearly $2 trillion which shows the world how serious the Federal Reserve is about getting the economy back on track.

More from the NY Times:

Fed officials have said they hope to expand the program next month, possibly to include the huge market for commercial mortgages, and both the Fed and Treasury hope the program will eventually provide up to $1 trillion in total financing.

What impact does this have? For starters, they are gearing up to help not only big business but small business and consumers. A total package to stimulate the economy. They are working hard to have a positive impact on each level of the economy and not focus on the top down method of recent years.

The biggest problem is though who will go first? Someone has to start buying but if they do not have the income to do this, what are they going to pay for the purchases with? If you go to the furniture store and buy a new couch, and do not have a job how will you pay for it? Sure the store may be able to process your order, pay its staff, order from their supplier who in turn orders the raw materials to make the couch, but at the end of the day if you can not pay for it, then no one gets paid.

The start of the chain has to be with the US and Canadian Governments to start buying and starting the order process with all sectors " small, medium and large businesses. Then these companies will hire people who will then buy stuff, which will then put more people to work and so on

Since we are seeing such bold moves on the available funds, I am certain they are gearing up to do just that. Get the money ready and then start buying.

Next problem: Okay, you just received an order for your product, but you need to hire staff, buy materials and equipment. You go to your bank and get turned away because your financials for the last 2 or 3 years do not look very good. Now what?

Now is the time to sit down with a Professional Commercial Finance Broker as they will have far more financial products available to them than the banks have so you can actually accept the orders that come in and be able to produce them.

My prediction is that Accounts Receivable Factoring and Purchase Order Finance will play a huge role in our immediate economy so it will not be a bad idea to get set up for it so you are not scrambling to find a funder.

About the Author:

Wade Henderson is a recognized Expert in the Business Finance World with over 13 years Experience in the Commercial Lending Field and a strong reputation for getting the deal done. Visit his Business Finance Website to put his experience to work for you. Click here to get your own unique version of this article with free reprint rights.