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This needs to be balanced: "All this is driven by corporate funds, sovereign funds and even VC funds with capital pools of tens of billions of dollars dwarfing
by lkrubner 8y ago
This needs to be balanced:
"All this is driven by corporate funds, sovereign funds and even VC funds with capital pools of tens of billions of dollars dwarfing any of the dollars in the first Dot Com bubble – and all looking for the next Tesla, Uber, Airbnb, or Alibaba."
Yes, but this is the other reality of today, from Calculated Risk:
"CR Note: Currently the target range for the federal funds rate is 1.75% to 2%. With inflation running close to 2% by most measures, the real Fed Funds rate is still negative."
In other words, investors still can't find enough investment opportunities that they find attractive, so they are still willing to give huge amounts of money to the government for free. Some of this can possibly be attributed to the Great Stagnation, the slowdown in innovation, growth, productivity and technology which began in 1973. Some of this can certainly be attributed to rising pools of savings all over the world. But it remains a fact that there are not enough software startups (nor enough manufacturing startups, nor enough legal startups, nor enough medical startups, nor enough of any kind of startup) to absorb enough capital to bring the world's capital markets back to "normal", if we can agree that "normal" means most investors expect to make at least a small profit on their investments, including their bond investments.
- wavefunction 8y agoI thought the wealthy were job creators, captains of innovation, stewards of the future... We'd be better off taxing these folks who can't find anything to invest in and redistributing the funds to the worst-off. The economic activity would inevitably be captured by these same ineffectual investors but at least the material situation of the poorest among us would be slightly better.
- ameliaquining 8y agoThat sounds like it'd be solving a different problem.
- ryandrake 8y agoThis problem is not new, but arguably getting worse. So much capital out there, in the hands of so few people, and they have no idea how to deploy it productively. Their trillions could be used to start whole industries, build critical infrastructure, and pull millions out of joblessness. Instead, they unimaginarively loan it to the government or a bank for a negative real return. The rich of the past built the modern world. Today’s rich seem to just sit on their wealth while inflation and missed opportunity erode all the value away.
- bobmarley1 8y agoOr you know maybe investors have smartened up and are unwilling to give money to the 20th "Uber for X" idea from some Stanford bros. Edit: Seems I hurt the feelings of Silicon Valley brogrammers selling their Uber for Dog Grooming with Blockchain AI startups lol.
- lkrubner 8y agoI don't think you hurt anyone's feelings, but your comment is entirely beside the point. To say that there are too many startups imitating Uber is simply to repeat the point that savings continue to exceed the investment opportunities that investors find interesting, and therefore investors continue to give money to the government for free, or even in the face of the risk that they will suffer a small loss.