Why are relationships essential in real life and the real economy?

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This article was first published in 2010 after the Financial Crisis


Why are relationships essential in real life? Real life minus relationships would cease to exist. Relationships provide the platform to merge abilities to obtain an outcome that could not be possible alone, and the forging of a relationship is the acknowledgment of trust in another individual(s) shared values or beliefs to unite and achieve a common goal.

Why are relationships essential for the real economy? The two facts are factual about the American economy that has been essential to our economic growth since the end of WWII. First, the growth in outstanding credit year after year has been the driver to recovery in previous economic downturns and the driver to widespread prosperity in the American economy. Second, the primary avenue to provide accessible credit throughout the United States is the branch banking network located in every community. The special relationship shared with banker consumer/small business owner would insure a return to growth as long as this relationship maintained integrity through the bonds of trust.

In previous downturns, the easing of monetary policy through rate reductions by the federal reserve would trickle down to the banks offering the consumer easier access credit at a cheaper cost. However, the credit collapse in 2008 has resulted in a vacuum of trust between banks and the consumer. The banks are not in the business of providing loans or taking risks on debt burdened consumer. Consumers are not spending money and small business owners are left in limbo without credit and are expanding and hiring new employees. The collapse of trust has crippled a relationship that is essential in the real economy. Until this relationship is mended, the real economy can be deemed as a future uncertain.


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