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> I think after the impending recession when VC money dries up this skill will be in high demand. The next dry-up will be modest, it might last 12-18 months. T

> I think after the impending recession when VC money dries up this skill will be in high demand. The next dry-up will be modest, it might last 12-18 months. The last one lasted a mere 2 to 2 1/2 years and required a rather extreme global recession. The US and globe broadly are drowning in truly enormous amounts of capital yielding nothing or close to nothing. Ten trillion dollars in wealth held in government debt yielding nothing. Tens of trillions more held in other low yielding bonds. There is a lot more real wealth (inflation adjusted) in investor hands today than there was just 20 years ago (at the dotcom bust). That capital is desperate for returns and will remain so. A 1/3 correction in the US stock market would merely set it back to April 2016. The Fed is now permanently in liquidity mode, primed to rapidly flood the system as needed. They're on twitch notice for the next QE round. This won't change for decades at least, as the Fed must endlessly run debt monetization programs, and always keep rates artificially low, to keep the US Government solvent (5% * $30 trillion = bankrupt US Government). Pretty much every central bank of consequence is in liquidity flood mode. They're mostly all behaving similarly. Venture capital will remain ample in such an environment of perma low rates and relatively low inflation. Ability, skill, will become drastically more valuable over the next ~20 years. Capital will become even easier to access and even more plentiful, if you are competent and or more generally have something to sell. The rich will get richer over the next 20 years and they will always be looking for somewhere to park it. The processes occuring now, including population stagnation in wealthy nations and aggressively advancing automation (robotics, AI, et al.) will push even more wealth to the top (taxes on the rich will rise in some cases to attempt to resolve that, certainly in the US). The returns that a capable individual can generate for capital, will soar in the coming decades. It's going to be an era of rather extreme value-capture amplification for people that have consequential skills; ever greater returns going to ever small groups of people. With population stagnation and or contraction in much of the developed world (which is only going to get worse), finding enough skilled / talented people will remain the problem, not capital. Simply put, the capital to skilled person ratio in affluent nations will continue to rapidly climb in favor of the skilled persons.

ta1234567890 7y ago
Your comment was a great read! Thank you. So, what would it take for that future not to happen? Or what should the people that are going to be the most affected do?
- adventured 7y ago
  Apparently HN has a text limit. All this time and I've never run into it (that I recall). So I posted the reply to this service: https://justpaste.it/43z7i https://justpaste.it/43z7i
  - mkl 7y ago
    For posterity's sake, please consider posting this excellent reply as a comment here, broken into pieces (replies to yourself). People do do that for this reason, and this is an appropriate comment for it.
quickthrower2 7y ago
Sounds a bit "free lunchy" to me. So nothing can stop the tidal wave of more government freshly printed money? What about the fact the money is really debt and that needs to be kept serviced? What about another credit crunch? Hyperinflation? What if people run from holding USD. Not likely, but who knows what will happen in 20 years time?
- deleted 7y ago
  [deleted]
- adventured 7y ago
  > Sounds a bit "free lunchy" to me. So nothing can stop the tidal wave of more government freshly printed money? Of course it's not a free lunch long-term. The cost will come due in the form of eventual sharper currency debasement, after the earlier stage process of traditional debt monetization by QE or similar (I'd expect some Fed experiments on that front). You could try to run higher inflation on an annual basis to chip away at the debt, or do larger sharper events more rarely. I think the Fed will strongly prefer sharper one-off events of big QEs (for a year or such in a recession context). In recessions, often people pile into such perceived safe investments, which is an opportunity for the Fed to take advantage of. The US still has plenty of room to play with more traditional QE yet, before it gets to the later stages of the Japan scenario. As do the Eurozone and China. The US can likely hold at least 1.5x its GDP in national debt, probably more like 2x to 2.5x, before it starts to see more serious problems. Japan doesn't have the global reserve currency, and we've seen what they've been able to handle. Eventually the debt - if it continues to pile up - gets so extreme there is no other option than to do sharper debasement. The recent QE (in both the US and Eurozone in their respective forms) was kicking the can down the road. China is similarly doing a lot of can kicking right now. Eventually no matter what the central banks do the debt problems and interest payments get too large, they suck up too much of a nation's free capital, and they're forced into a more serious currency event. The Fed has to keep pushing the interest cost per dollar of debt down. That has gradually diminishing potential though, as realistically you can only go so far down. Japan, for the most prominent recent example, found the lower limits of what's possible there. They're a forecast for what the US, Eurozone and China may face. The Fed is an enabler of bad behavior and I expect they'll continue doing it (some of it is intentional as a prop, some of it is a side effect). They enable the US Govt to borrow money at artificially cheap rates, which increases over-spending by Congress. They enable the military industrial complex and its spending levels (they temporarily keep the US from having to make a choice between social welfare and present high military spending levels). They enable Congress to kick the can down the road on spending, avoiding political-career decision risks. They enable artificially low tax rates (eventually you have to pay for the budget deficits & debt, one way or another), for pretty much everyone. They enable artificially low mortgage rates and other borrowing rates, which pumps up consumer behavior and inflates housing prices.

ta1234567890 7y ago

Your comment was a great read! Thank you. So, what would it take for that future not to happen? Or what should the people that are going to be the most affected do?

adventured 7y ago
Apparently HN has a text limit. All this time and I've never run into it (that I recall). So I posted the reply to this service: https://justpaste.it/43z7i https://justpaste.it/43z7i
- mkl 7y ago
  For posterity's sake, please consider posting this excellent reply as a comment here, broken into pieces (replies to yourself). People do do that for this reason, and this is an appropriate comment for it.

quickthrower2 7y ago

Sounds a bit "free lunchy" to me. So nothing can stop the tidal wave of more government freshly printed money? What about the fact the money is really debt and that needs to be kept serviced? What about another credit crunch? Hyperinflation? What if people run from holding USD. Not likely, but who knows what will happen in 20 years time?

deleted 7y ago
[deleted]
adventured 7y ago
> Sounds a bit "free lunchy" to me. So nothing can stop the tidal wave of more government freshly printed money? Of course it's not a free lunch long-term. The cost will come due in the form of eventual sharper currency debasement, after the earlier stage process of traditional debt monetization by QE or similar (I'd expect some Fed experiments on that front). You could try to run higher inflation on an annual basis to chip away at the debt, or do larger sharper events more rarely. I think the Fed will strongly prefer sharper one-off events of big QEs (for a year or such in a recession context). In recessions, often people pile into such perceived safe investments, which is an opportunity for the Fed to take advantage of. The US still has plenty of room to play with more traditional QE yet, before it gets to the later stages of the Japan scenario. As do the Eurozone and China. The US can likely hold at least 1.5x its GDP in national debt, probably more like 2x to 2.5x, before it starts to see more serious problems. Japan doesn't have the global reserve currency, and we've seen what they've been able to handle. Eventually the debt - if it continues to pile up - gets so extreme there is no other option than to do sharper debasement. The recent QE (in both the US and Eurozone in their respective forms) was kicking the can down the road. China is similarly doing a lot of can kicking right now. Eventually no matter what the central banks do the debt problems and interest payments get too large, they suck up too much of a nation's free capital, and they're forced into a more serious currency event. The Fed has to keep pushing the interest cost per dollar of debt down. That has gradually diminishing potential though, as realistically you can only go so far down. Japan, for the most prominent recent example, found the lower limits of what's possible there. They're a forecast for what the US, Eurozone and China may face. The Fed is an enabler of bad behavior and I expect they'll continue doing it (some of it is intentional as a prop, some of it is a side effect). They enable the US Govt to borrow money at artificially cheap rates, which increases over-spending by Congress. They enable the military industrial complex and its spending levels (they temporarily keep the US from having to make a choice between social welfare and present high military spending levels). They enable Congress to kick the can down the road on spending, avoiding political-career decision risks. They enable artificially low tax rates (eventually you have to pay for the budget deficits & debt, one way or another), for pretty much everyone. They enable artificially low mortgage rates and other borrowing rates, which pumps up consumer behavior and inflates housing prices.