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New money is created through bank loans, or monetizing government spending, or emergency asset purchases by the Fed – none of which are the typical source of VC

• 7e 4y ago
  From https://hackernoon.com/the-macroeconomics-of-venture-capital-c6af86023022 https://hackernoon.com/the-macroeconomics-of-venture-capital...: "when the Fed engages in quantitative easing, it goes a step further and attempts to keep returns for longer-term bonds down as well. In the United States, this meant the purchasing of mortgage-backed securities and government bonds. (In Japan, central bankers have had to utilize even more extreme measures, going so far as directly buying not only government bonds but also stocks on the public market). By bidding up the prices of long-term bonds through quantitative easing, the Fed forces investors to seek returns in even riskier assets, such as equities. As investors flow into the equity market, stock prices are bid up to the point at which expected returns for stocks also become unattractive. At this point, the logical next move for global, institutional investors is to move to more risky investment options such as private equity and venture capital. This is exactly what we’ve seen." Other quick links: http://jibe-net.com/journals/jibe/Vol_8_No_2_December_2020/1.pdf http://jibe-net.com/journals/jibe/Vol_8_No_2_December_2020/1... https://www.taylorfrancis.com/chapters/edit/10.4324/9781003199168-12/spillover-effect-quantitative-easing-venture-capital-flow-emerging-economies-dipesh-karki-hari-gopal-risal-shirshak-dahal https://www.taylorfrancis.com/chapters/edit/10.4324/97810031...