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No, that's not the point of my analogy. Some people thing buying a Hummer is a very good use of their money. Some don't. Some do and later change their minds.
by wpietri 4y ago
No, that's not the point of my analogy. Some people thing buying a Hummer is a very good use of their money. Some don't. Some do and later change their minds.
My point is that easy money does not cause choices. People choose. Jerome Powell did not make anybody buy a Hummer, even if that was a predictable outcome of a drop in interest rates. Investment in bad startups may be a predictable outcome of easy money, but specific people still specifically chose those specific bad startups when they could have made better choices.
- berkle4455 4y agoI think you should spend a bit of time looking into how VCs operate. Their LPs are looking for returns and inject them with more and more cash during ZIRP. A VC fund isn’t a bank, they have to invest. So they make progressively poorer and poorer decisions under the constant weight of easy money.
- wpietri 4y agoThat's some impressive condescension from somebody who does not know how VCs work. They are not obligated to take the initial investment, they are not obliged to make a capital call, and they are not obligated to just spend the money they do take. They choose to make poorer and poorer decisions because it's in their short-term financial interest to do so.
- deleted 4y ago[deleted]