3 ms·

This is a result of low interest rates in the last 20 years. There is an insane amount of institutional money looking for a home, and it is also impossible to g

by zpeti 6y ago

This is a result of low interest rates in the last 20 years. There is an insane amount of institutional money looking for a home, and it is also impossible to get decent yields with money right now. Therefore any businesses with potential to become huge, will be happily funded for a very long time. This is only going to get worse due to the insane stimulus due to the coronavirus. It is almost as if money now has so little value that losing as little of it as possible is what investors are looking for, aka negative interest rates by another name. I wouldn’t blame the companies for this, this is a result of governments not willing to allow recessions in the early 00s, then in 08, and now. But it has serious long term effects which are hard to understand as it’s so complex.

logicchains 6y ago
>But it has serious long term effects which are hard to understand as it’s so complex. This paper attempts to study it: https://www.bis.org/publ/qtrpdf/r_qt1809g.pdf https://www.bis.org/publ/qtrpdf/r_qt1809g.pdf, and found that artificially low interest rates create zombie firms that could not survive without such low rates, and "that zombies weigh on economic performance because they are less productive and because their presence lowers investment in and employment at more productive firms.".
- an_opabinia 6y ago
  Would you rather the funding for Palantir sit around and do nothing, or pay real human beings? What do you think all those expenses are? Someone else’s income.
  - lowdose 6y ago
    This is a false dichotomy, the point was that we should scale back all the QE shenanigans to prevent these second order effects.
mellavora 6y ago
Really raises some interesting questions as to what money is actually. And why/how we allocate these fictional "tokens" to people and collections of people.
- gwd 6y ago
  Money is a game we play to organize how we, as a society, spend our resources. It works because: 1. Usually, at smaller numbers, you get money by doing something for society: i.e., you have a job. 2. At larger numbers, money is economic decision-making power: people with the money decide what products get built, what movies get made, and so on. And usually, if you make a good decision with that money, you end up with more money and thus more power to make economic decisions; and if you make a bad decisions, you end up with less money and less power to make economic decisions. Obviously these aren't always true. I'm not an anti-capitalist or a lassaize-faire libertarian: I want rules to cause our system to approximate the above two patterns as closely as possible.

by zpeti 6y ago

logicchains 6y ago

>But it has serious long term effects which are hard to understand as it’s so complex. This paper attempts to study it: https://www.bis.org/publ/qtrpdf/r_qt1809g.pdf https://www.bis.org/publ/qtrpdf/r_qt1809g.pdf, and found that artificially low interest rates create zombie firms that could not survive without such low rates, and "that zombies weigh on economic performance because they are less productive and because their presence lowers investment in and employment at more productive firms.".

an_opabinia 6y ago
Would you rather the funding for Palantir sit around and do nothing, or pay real human beings? What do you think all those expenses are? Someone else’s income.
- lowdose 6y ago
  This is a false dichotomy, the point was that we should scale back all the QE shenanigans to prevent these second order effects.

mellavora 6y ago

Really raises some interesting questions as to what money is actually. And why/how we allocate these fictional "tokens" to people and collections of people.

gwd 6y ago
Money is a game we play to organize how we, as a society, spend our resources. It works because: 1. Usually, at smaller numbers, you get money by doing something for society: i.e., you have a job. 2. At larger numbers, money is economic decision-making power: people with the money decide what products get built, what movies get made, and so on. And usually, if you make a good decision with that money, you end up with more money and thus more power to make economic decisions; and if you make a bad decisions, you end up with less money and less power to make economic decisions. Obviously these aren't always true. I'm not an anti-capitalist or a lassaize-faire libertarian: I want rules to cause our system to approximate the above two patterns as closely as possible.