THE US FEDERAL RESERVE - NOT ON THE SIDE OF SMALL BUSINESSES

The Federal Reserve creates and regulates the flow of money into the economy of the United States. We can use the word ‘regulate’ or the word ‘manipulate’. It’s a form of subsidy. When a lot of money flows, businesses take out loans and hire new employees. This can cause overproduction as well as inflation of the money supply. When the boom collapses, workers are laid off and unemployment soars. It’s the job of the Fed to achieve some kind of balance between boom and bust.
Some would question whether the boom/bust cycle is healthy, and ask, who benefits from it?
Everyone can gain during the boom cycle, but in the bust cycle, businesses are purchased and consolidated into fewer and fewer hands. So we can say that only the very wealthy benefit from the up and down nature of the economy.
So that should lead you to ask…who are the Federal Reserve and how is it placed in the context of this cycle? It’s not a government agency. It is composed of 12 private banks in the US. If I were very cynical, I would venture to guess that these 12 banks are not going to suffer during the bust cycle. Meanwhile, smaller high street banks are likely to be gobbled up by the bigger banks. Corporations have ‘rights’, but the smaller corporations are likely to be swallowed up too, by the bigger sharks in the sea. And labor gets misallocated.

Let’s look at this from the point of view of jobs and labor. What and who, actually creates jobs in the US? The biggest corporations are not job creators in the US, which is why President Obama is urging corporations to bring jobs back from overseas. Small businesses (under 500 employees) are the major job creators (65 percent of the jobs between 1993 and 2009, according to the US Small Business Administration.) But as I’ve explained above, these smaller businesses are the most likely to go under during a bust cycle. Additionally, the biggest corporations receive the most tax subsidies, while the smaller ones often endure tax increases and a reduction in loans.
An analyst wrote in December 2011:
“New federal data show that the number of small bank loans to business has fallen to the lowest point in more than a decade, cutting the flow of money to a sector that's usually a job-creation powerhouse.”

http://bottomline.msnbc.msn.com/_news/2011/12/15/9470807-bank-loans-to-small-business-fall-to-12-year-low