4 ms·

This is a slick visualization and agree with your point. I feel ZIRP for such an extended time period was nuts and it was responsible for the asset bubble, let

This is a slick visualization and agree with your point. I feel ZIRP for such an extended time period was nuts and it was responsible for the asset bubble, let weak players survive and supported more risk taking. As I was looking at the chart, I noticed there was a big bump from 1994 to 1995 (like from 3% to 6%). What happened then? Was it inflation? I recall rates were about 6ish since when I was in undergrad. I guess Greenspan/Y2K/dot com days. Edited: found the answer and it is intriguing: https://markets.businessinsider.com/news/bonds/federal-reserve-interest-rate-hikes-1994-playbook-bond-market-massacre-2022-6#:~:text=Greenspan's%20Fed%20raised%20rates%20seven,economy%20from%20driving%20up%20inflation https://markets.businessinsider.com/news/bonds/federal-reser.... The stock market craziness continued even with high rates .. wow .. didn't expect that.

Apocryphon 3y ago
Makes me wonder how the last decade and half of tech would have looked like had not ZIRP been around to prop up the industry.
- brutus1213 3y ago
  When I finished undergrad, the most desirable tech company to work for was Microsoft. They paid 55-60K (starting comp) I recall? Interviews were nothing like today (with the insanity of leetcode). What is mind boggling is that I'd have a better quality of life in those days (houses were super cheap) and work was not as competitive/backstabby as today. The million dollar compensations (when counting stock growth) and intensity/stress around interviews and promotions is what ZIRP wrought for the elite in tech. Would be interested if people who were mid-career in the mid 90s can comment on their perspective.
  - tetrep 3y ago
    > Interviews were nothing like today (with the insanity of leetcode). Would that mean it was the era of "Why are manhole covers round?" I don't want to sound like someone who supports leetcode (mostly because I don't), but it seems like it's at least an attempt at measuring something related to programming skills.
    - runako 3y ago
      Eh...interviews were a mix of brainteasers like the manhole question and coding questions. IIRC some of my MSFT interviews back when allowed pseudocode but mostly wanted to fill the role of e.g. FizzBuzz. Then IIRC there was some validation of C or C++ competency. Leetcode is FizzBuzz on steroids, but IMHO is not on its own likely to be more predictive of success at a company than the old MSFT way.
    - wongarsu 3y ago
      Being able to reason about possible design decisions and constraints of things you encounter sounds much more related to programming jobs than being able to code a red-black tree from the top of your head.
    - red-iron-pine 3y ago
      > Would that mean it was the era of "Why are manhole covers round?" "how many balloons can you fit under this table"
  - supportengineer 3y ago
    High quality of life hinges upon affordable housing prices.
  - ryandrake 3y ago
    Looking back, the highest quality of life I ever enjoyed was when I was working my first software development job out of university in the 90s. $45K/year comp and I bought a condo for $45K. Imagine: being able to buy an actual house for a mere 1X your yearly salary. Unheard of now. It's been all downhill from there in terms of the cost-of-living:compensation ratio. And that's for software development, one of the more financially lucrative careers out there. It's been even steeper downhill for non-techies.
  - tomcam 3y ago
    Was there 96-2000 and agree completely. It was a paradisical time and I knew it, because this was nowhere near my first job. Best work situation I ever had. People were great, and bureaucracy was big enough to be useful but small enough to be intrusive.
heavyset_go 3y ago
> This is a slick visualization and agree with your point. I feel ZIRP for such an extended time period was nuts and it was responsible for the asset bubble, let weak players survive and supported more risk taking. I think it might also end up being important to remain competitive in a global market where the other economic superpower's government is willing to invest trillions into building whatever it wants and needs despite profitability[1]. Some things we want/need won't be immediately profitable, or even profitable in the long run. They might not even be things we realize we need until something unprofitable is researched and developed. Not saying that Snap is something we need, but if the US is forced to strictly rely on market forces to compete, "free" capital via low/no interest rates is a way to kind of do it. [1] https://tnsr.org/2022/12/chinas-brute-force-economics-waking-up-from-the-dream-of-a-level-playing-field/ https://tnsr.org/2022/12/chinas-brute-force-economics-waking...
- rchaud 3y ago
  How much of ZIRP-inflated capital went into chasing fanciful ventures like UberEats, Wework, Doordash, Airbnb, crypto and Twitter? State-run capitalism channeling funds into strategically important areas feels like a breath of fresh air compared to handing it to venture capitalists.
  - heavyset_go 3y ago
    I agree, hence my comment about the US choosing to rely strictly on markets to allocate capital. If the only lever the country is willing to pull is to adjust interest rates, it's sort of a means to that end, however inefficient.
  - brutus1213 3y ago
    There is a nice Youtube channel called asionometry that shows that this was done time and time again (maybe more in Asia and Europe) in things related to electronics and semicon manufacturer, and it failed most of the time. TSMC was a shocking exception though I'm sure there are others. In the old days, these investments were tiny compared to what is being currently spent on the chips act. I think for STEM a better approach would be a govt sponsored entrepreneurship thing .. imagine the same YC deal but we give this to any PhDs (or maybe even Masters) once in their career. I'm from Canada and when I see the cash wasted on other initiatives, I can't help but wonder why this is done. Not to say Masters or PhDs are geniuses. It is just the current system means only the well-to-do or well-pedigreed can get into places like YC (and maybe elite schools like Berkeley) while intelligence, grit and ambition are more widely distributed.

Apocryphon 3y ago

Makes me wonder how the last decade and half of tech would have looked like had not ZIRP been around to prop up the industry.

brutus1213 3y ago
When I finished undergrad, the most desirable tech company to work for was Microsoft. They paid 55-60K (starting comp) I recall? Interviews were nothing like today (with the insanity of leetcode). What is mind boggling is that I'd have a better quality of life in those days (houses were super cheap) and work was not as competitive/backstabby as today. The million dollar compensations (when counting stock growth) and intensity/stress around interviews and promotions is what ZIRP wrought for the elite in tech. Would be interested if people who were mid-career in the mid 90s can comment on their perspective.
- tetrep 3y ago
  > Interviews were nothing like today (with the insanity of leetcode). Would that mean it was the era of "Why are manhole covers round?" I don't want to sound like someone who supports leetcode (mostly because I don't), but it seems like it's at least an attempt at measuring something related to programming skills.
  - runako 3y ago
    Eh...interviews were a mix of brainteasers like the manhole question and coding questions. IIRC some of my MSFT interviews back when allowed pseudocode but mostly wanted to fill the role of e.g. FizzBuzz. Then IIRC there was some validation of C or C++ competency. Leetcode is FizzBuzz on steroids, but IMHO is not on its own likely to be more predictive of success at a company than the old MSFT way.
  - wongarsu 3y ago
    Being able to reason about possible design decisions and constraints of things you encounter sounds much more related to programming jobs than being able to code a red-black tree from the top of your head.
  - red-iron-pine 3y ago
    > Would that mean it was the era of "Why are manhole covers round?" "how many balloons can you fit under this table"
- supportengineer 3y ago
  High quality of life hinges upon affordable housing prices.
- ryandrake 3y ago
  Looking back, the highest quality of life I ever enjoyed was when I was working my first software development job out of university in the 90s. $45K/year comp and I bought a condo for $45K. Imagine: being able to buy an actual house for a mere 1X your yearly salary. Unheard of now. It's been all downhill from there in terms of the cost-of-living:compensation ratio. And that's for software development, one of the more financially lucrative careers out there. It's been even steeper downhill for non-techies.
- tomcam 3y ago
  Was there 96-2000 and agree completely. It was a paradisical time and I knew it, because this was nowhere near my first job. Best work situation I ever had. People were great, and bureaucracy was big enough to be useful but small enough to be intrusive.

heavyset_go 3y ago

> This is a slick visualization and agree with your point. I feel ZIRP for such an extended time period was nuts and it was responsible for the asset bubble, let weak players survive and supported more risk taking. I think it might also end up being important to remain competitive in a global market where the other economic superpower's government is willing to invest trillions into building whatever it wants and needs despite profitability[1]. Some things we want/need won't be immediately profitable, or even profitable in the long run. They might not even be things we realize we need until something unprofitable is researched and developed. Not saying that Snap is something we need, but if the US is forced to strictly rely on market forces to compete, "free" capital via low/no interest rates is a way to kind of do it. [1] https://tnsr.org/2022/12/chinas-brute-force-economics-waking-up-from-the-dream-of-a-level-playing-field/ https://tnsr.org/2022/12/chinas-brute-force-economics-waking...

rchaud 3y ago
How much of ZIRP-inflated capital went into chasing fanciful ventures like UberEats, Wework, Doordash, Airbnb, crypto and Twitter? State-run capitalism channeling funds into strategically important areas feels like a breath of fresh air compared to handing it to venture capitalists.
- heavyset_go 3y ago
  I agree, hence my comment about the US choosing to rely strictly on markets to allocate capital. If the only lever the country is willing to pull is to adjust interest rates, it's sort of a means to that end, however inefficient.
- brutus1213 3y ago
  There is a nice Youtube channel called asionometry that shows that this was done time and time again (maybe more in Asia and Europe) in things related to electronics and semicon manufacturer, and it failed most of the time. TSMC was a shocking exception though I'm sure there are others. In the old days, these investments were tiny compared to what is being currently spent on the chips act. I think for STEM a better approach would be a govt sponsored entrepreneurship thing .. imagine the same YC deal but we give this to any PhDs (or maybe even Masters) once in their career. I'm from Canada and when I see the cash wasted on other initiatives, I can't help but wonder why this is done. Not to say Masters or PhDs are geniuses. It is just the current system means only the well-to-do or well-pedigreed can get into places like YC (and maybe elite schools like Berkeley) while intelligence, grit and ambition are more widely distributed.