3 ms·

What if you're just too young to remember a business cycle because you weren't an adult or were still in college so were insulated from 2008? Its funny to read

What if you're just too young to remember a business cycle because you weren't an adult or were still in college so were insulated from 2008? Its funny to read all these takes from "kids" who think that all the fundamentals have totally changed at this point like the economy has turned some fundamental 180 degree turn and we're heading back towards >6% rates forever. It hasn't. The Fed is going to crash the economy into a brick wall to bring down inflation via raising unemployment (we're probably still 6-12 months out) but then the Fed will slash rates in a panic and go "oopsie". This will bring back yet another low interest rate / cheap money period. I suspect the next cycle will be shorter and a decade of ZIRP won't happen again, but we're going back to ZIRP again once the recession hits.

blitzar 4y ago
Born in the 80's I see. Complaining that people born in the90's have seen less than someone born 10 years earlier. There are people born 20 years before you that have seen 2x as much.
- lamontcg 4y ago
  > Born in the 80's I see incorrect.
notahacker 4y ago
> What if you're just too young to remember a business cycle because you weren't an adult or were still in college so were insulated from 2008? This. Whole article is trying to blame a whole lot of trends which were already very much present in 2008 (and in some cases specifically responsible for 2008) on what happened afterwards when interest rates were lower It's not low interest rates that make people believe that Uber has a route to profitability (higher interest rates might kill off some small-margin businesses reliant on debt funding and reduce valuation of all companies; they won't make people investing sovereign wealth funds in US equities smarter about which companies they allocate their funds to), and higher interest rates certainly aren't going to encourage companies to reinvest their cash piles in R&D or help new market entrants compete away the monopoly power that generates those cash piles
baandang 4y ago
We are not slashing rates, that is not going to happen. Those times are over. We can not slash rates without inflation becoming a larger issue. We had a nice run but this is back to the historic norm that inflation is always lurking in the background and highly constraining on central bank policy. You are just repeating a standard narrative that is almost certainly wrong. 6-12 months out a mild recession happens and then the Fed slashes interest rates and the market takes off. I personally suspect this is all a form of denial of how ugly the situation is economically. Once inflation catches a spark it doesn't just go out because basically everything economic in terms of a recovery is inflationary.
- lamontcg 4y ago
  > Those times are over. We can not slash rates without inflation becoming a larger issue. If unemployment is pushing 8% they certainly can. > Once inflation catches a spark it doesn't just go out because basically everything economic in terms of a recovery is inflationary. This is nonsense. If the economy is in recession and unemployment is at 6-8% then we won't be in a recovery and it won't be inflationary. It will wind up blowing up another asset bubble, but they don't care about that, which is why economists distinguish between inflation and housing appreciation. The pandemic recession was way too brief and v-shaped and was heavily cushioned by all the stimulus. That won't happen next time. That isn't the new pattern of recessions.

blitzar 4y ago

Born in the 80's I see. Complaining that people born in the90's have seen less than someone born 10 years earlier. There are people born 20 years before you that have seen 2x as much.

lamontcg 4y ago
> Born in the 80's I see incorrect.

notahacker 4y ago

> What if you're just too young to remember a business cycle because you weren't an adult or were still in college so were insulated from 2008? This. Whole article is trying to blame a whole lot of trends which were already very much present in 2008 (and in some cases specifically responsible for 2008) on what happened afterwards when interest rates were lower It's not low interest rates that make people believe that Uber has a route to profitability (higher interest rates might kill off some small-margin businesses reliant on debt funding and reduce valuation of all companies; they won't make people investing sovereign wealth funds in US equities smarter about which companies they allocate their funds to), and higher interest rates certainly aren't going to encourage companies to reinvest their cash piles in R&D or help new market entrants compete away the monopoly power that generates those cash piles

baandang 4y ago

We are not slashing rates, that is not going to happen. Those times are over. We can not slash rates without inflation becoming a larger issue. We had a nice run but this is back to the historic norm that inflation is always lurking in the background and highly constraining on central bank policy. You are just repeating a standard narrative that is almost certainly wrong. 6-12 months out a mild recession happens and then the Fed slashes interest rates and the market takes off. I personally suspect this is all a form of denial of how ugly the situation is economically. Once inflation catches a spark it doesn't just go out because basically everything economic in terms of a recovery is inflationary.

lamontcg 4y ago
> Those times are over. We can not slash rates without inflation becoming a larger issue. If unemployment is pushing 8% they certainly can. > Once inflation catches a spark it doesn't just go out because basically everything economic in terms of a recovery is inflationary. This is nonsense. If the economy is in recession and unemployment is at 6-8% then we won't be in a recovery and it won't be inflationary. It will wind up blowing up another asset bubble, but they don't care about that, which is why economists distinguish between inflation and housing appreciation. The pandemic recession was way too brief and v-shaped and was heavily cushioned by all the stimulus. That won't happen next time. That isn't the new pattern of recessions.