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It is fueled by the advertising race (companies bidding against each other to complete for consumer's attention), which was in turn fueled by the monetary polic

It is fueled by the advertising race (companies bidding against each other to complete for consumer's attention), which was in turn fueled by the monetary policy (effectively giving companies low-interest money hoping they would come up with the next TikTok). In other words, we injected money into that sector, so we saw it growing. The question is, how far can it be sustained after the interest rates are up, and whether we could possibly lower them without immediately triggering another inflation wave.

mrkramer 3y ago
>It is fueled by the advertising race (companies bidding against each other to complete for consumer's attention) Exactly but I would like to add that the companies which are in the advertising race are most likely monopolistic competitors[0] or in another words, they have very similar products and the only way to reach customers and to build brand is to invest heavily in the advertising. That's why advertising will stay strong and viable as a business model for very long time. >In other words, we injected money into that sector, so we saw it growing. But if the money is not used efficiently and if no innovations come about then no matter how much you invest, you won't see a sector growing. [0] https://en.wikipedia.org/wiki/Monopolistic_competition https://en.wikipedia.org/wiki/Monopolistic_competition