2 ms·

Any time you have an entity that's low on capital but high in potential, it's bound to attract outside investors, which is in turn bound to produce current acco

by whack 10y ago

Any time you have an entity that's low on capital but high in potential, it's bound to attract outside investors, which is in turn bound to produce current account deficits. This isn't necessarily a bad thing. Having outside investors provide the capital needed to ramp up your operations, can be a huge win-win for both sides. In fact, this is exactly how most successful startups got to where they are today. In contrast, I can't think of a single country with hyper-inflation that had a successful economy.

crdoconnor 10y ago
>Any time you have an entity that's low on capital but high in potential, it's bound to attract outside investors, which is in turn bound to produce current account deficits. This isn't necessarily a bad thing. Taking on large foreign debts has pretty much led to disaster everywhere from Greece to Thailand to Zimbabwe. Where it's "worked out", it's usually been a way for foreign investors to extract wealth from a country's natural resources. Any time anybody tells you that the best way to grow a business is to rack up lots of credit card debt, run. >Having outside investors provide the capital needed to ramp up your operations, can be a huge win-win for both sides. You have to make sure that the outside investors are put on a leash (as they are in China). If you don't, you end up bringing in lots of capital causing a spike of growth for a while, destroying local businesses (who can't compete with foreign businesses) and then when it ends the economy craters and inflation spikes once again. >In contrast, I can't think of a single country with hyper-inflation that had a successful economy. I can't think of a single country with a successful economy that hasn't at hasn't taken the IMF's guidelines and done the exact opposite (contrast South Korea's relative success with Thailand's).

by whack 10y ago

crdoconnor 10y ago

>Any time you have an entity that's low on capital but high in potential, it's bound to attract outside investors, which is in turn bound to produce current account deficits. This isn't necessarily a bad thing. Taking on large foreign debts has pretty much led to disaster everywhere from Greece to Thailand to Zimbabwe. Where it's "worked out", it's usually been a way for foreign investors to extract wealth from a country's natural resources. Any time anybody tells you that the best way to grow a business is to rack up lots of credit card debt, run. >Having outside investors provide the capital needed to ramp up your operations, can be a huge win-win for both sides. You have to make sure that the outside investors are put on a leash (as they are in China). If you don't, you end up bringing in lots of capital causing a spike of growth for a while, destroying local businesses (who can't compete with foreign businesses) and then when it ends the economy craters and inflation spikes once again. >In contrast, I can't think of a single country with hyper-inflation that had a successful economy. I can't think of a single country with a successful economy that hasn't at hasn't taken the IMF's guidelines and done the exact opposite (contrast South Korea's relative success with Thailand's).