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Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) For people who don't want to look it up... Some of the biggest are

Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) For people who don't want to look it up... Some of the biggest are pension funds! It's not just high net worth individuals or companies, it's also mom & pop retirement funds. https://www.quora.com/Who-are-the-biggest-investors-limited-partners-in-US-venture-capital https://www.quora.com/Who-are-the-biggest-investors-limited-...

avs733 9y ago
it is a big circle of value extraction by as many members of the capitalist class as possible...
aphextron 9y ago
>Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) The Fed, with their policy of Quantitative Easing over the past 5 years.
- dragonwriter 9y ago
  The Fed QE policy was over about 5 years (late 2009 to late 2014), but not “the past 5 years”.
  - thephyber 9y ago
    Which doesn't disprove the gp. The Fed still has $4.5 trillion in assets on their books, when they had < $1 trillion pre-QE1. The Fed supported $3.5 trillion in risky assets long-term. The Fed has paid US banks to hold onto currency reserves that were injected into them, effectively subsidizing more risky investments throughout the economy. This includes equity growth, equity distributions, low bond yields, kept the capitalization rate (ignoring Fed injections into banks) low, etc. Without keeping QE on the books, these other current market investments wouldn't have been possible. QE has allowed risky debt to continue to float around the entire financial system without market forces quickly drowning the riskiest. Effectively the Fed is subsidizing the risk and the average person will pay when inflation finally picks up. Just because we still don't fully understand the new "laws of finance" while we are in this QE bubble doesn't mean the old laws of finance won't still apply when QE dissolves.
- deleted 9y ago
  [deleted]
- riku_iki 9y ago
  But Fed is not just giving money for free. VCs will need to return them eventually.
  - jklein11 9y ago
    The Fed isn't giving money directly to the VCs (atlest that I know of). The fed is keeping interest rates low on Treasury Bonds low. The rationale for this is: if investors get a small return on a riskless investment, they will be willing to take bigger risks for less rewards. Theoretically this should increase the investment in Venture Capital firms.
    - riku_iki 9y ago
      Sure, plus there is another money flow: low long term borrowing costs, with borrowers looking for a way to invest with higher return. But in both cases these people (investors, borrowers) will want to get their money back eventually..
- colefichter 9y ago
  The quantitative easing FUD on HN is getting pretty tiresome. It gets blamed for everything from VC subsidies to house prices and just about everything in between. All three rounds of QE in the USA focused on mortgage-backed securities and Treasury securities. Are you suggesting there were a bunch of VCs who were neck deep in the MBS or CDS/CDO rackets in the mid 00's? See https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_QE2.2C_and_QE3 https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_...
  - aphextron 9y ago
    I'm not making any kind of judgement to the effects of QE policy, simply stating a fact.
dragonwriter 9y ago
> Now, as a thought exercise: who do you think subsidizes VCs? Everyone who pays taxes on non-capital income.
- sqeaky 9y ago
  How does the money get from taxes to VCs?
  - compiler-guy 9y ago
    The point is that money _doesn't_ get from VCs to taxes. At least not in the same percentages as normal income.
  - barrkel 9y ago
    All tax breaks are government subsidies. Tax rates that are lower on one class of income than another are tax breaks.
undersuit 9y ago
It's a good start, for a basic income I mean. Not that I'm necessarily advocating we take away retirement funds, but a 5% return on pension assets distributed to the American people yearly would be more than $3000 per person. Include some other assets and we could move make UBI less basic and more income. From 2009: >Banks have $96trillion in assets, investment funes hold $22trillion, insurance firms have $21trillion and pension funds $19 trillion. http://www.wealthmanagement.com/blog/fun-fact-day-know-and-tell http://www.wealthmanagement.com/blog/fun-fact-day-know-and-t...

avs733 9y ago

it is a big circle of value extraction by as many members of the capitalist class as possible...

aphextron 9y ago

>Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) The Fed, with their policy of Quantitative Easing over the past 5 years.

dragonwriter 9y ago
The Fed QE policy was over about 5 years (late 2009 to late 2014), but not “the past 5 years”.
- thephyber 9y ago
  Which doesn't disprove the gp. The Fed still has $4.5 trillion in assets on their books, when they had < $1 trillion pre-QE1. The Fed supported $3.5 trillion in risky assets long-term. The Fed has paid US banks to hold onto currency reserves that were injected into them, effectively subsidizing more risky investments throughout the economy. This includes equity growth, equity distributions, low bond yields, kept the capitalization rate (ignoring Fed injections into banks) low, etc. Without keeping QE on the books, these other current market investments wouldn't have been possible. QE has allowed risky debt to continue to float around the entire financial system without market forces quickly drowning the riskiest. Effectively the Fed is subsidizing the risk and the average person will pay when inflation finally picks up. Just because we still don't fully understand the new "laws of finance" while we are in this QE bubble doesn't mean the old laws of finance won't still apply when QE dissolves.
deleted 9y ago
[deleted]
riku_iki 9y ago
But Fed is not just giving money for free. VCs will need to return them eventually.
- jklein11 9y ago
  The Fed isn't giving money directly to the VCs (atlest that I know of). The fed is keeping interest rates low on Treasury Bonds low. The rationale for this is: if investors get a small return on a riskless investment, they will be willing to take bigger risks for less rewards. Theoretically this should increase the investment in Venture Capital firms.
  - riku_iki 9y ago
    Sure, plus there is another money flow: low long term borrowing costs, with borrowers looking for a way to invest with higher return. But in both cases these people (investors, borrowers) will want to get their money back eventually..
colefichter 9y ago
The quantitative easing FUD on HN is getting pretty tiresome. It gets blamed for everything from VC subsidies to house prices and just about everything in between. All three rounds of QE in the USA focused on mortgage-backed securities and Treasury securities. Are you suggesting there were a bunch of VCs who were neck deep in the MBS or CDS/CDO rackets in the mid 00's? See https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_QE2.2C_and_QE3 https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_...
- aphextron 9y ago
  I'm not making any kind of judgement to the effects of QE policy, simply stating a fact.

dragonwriter 9y ago

> Now, as a thought exercise: who do you think subsidizes VCs? Everyone who pays taxes on non-capital income.

sqeaky 9y ago
How does the money get from taxes to VCs?
- compiler-guy 9y ago
  The point is that money _doesn't_ get from VCs to taxes. At least not in the same percentages as normal income.
- barrkel 9y ago
  All tax breaks are government subsidies. Tax rates that are lower on one class of income than another are tax breaks.

undersuit 9y ago

It's a good start, for a basic income I mean. Not that I'm necessarily advocating we take away retirement funds, but a 5% return on pension assets distributed to the American people yearly would be more than $3000 per person. Include some other assets and we could move make UBI less basic and more income. From 2009: >Banks have $96trillion in assets, investment funes hold $22trillion, insurance firms have $21trillion and pension funds $19 trillion. http://www.wealthmanagement.com/blog/fun-fact-day-know-and-tell http://www.wealthmanagement.com/blog/fun-fact-day-know-and-t...