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The word "profligacy" has taken on new meaning in the past several years, but keep in mind that many people believe the first .com bubble was in part a result o

The word "profligacy" has taken on new meaning in the past several years, but keep in mind that many people believe the first .com bubble was in part a result of Alan Greenspan not raising rates quickly enough in response to a stock market that was overheating. In other words, even though rates can't get much lower than they have been the past several years doesn't mean that they weren't too low in the late 1990s too. As for IPOs, I'm not sure that what we saw in the first boom should be used as a baseline for anything. The IPO window has most certainly been open and Facebook's IPO was an historic one. In any case, I'm not sure I understand the point you're making. Even if you believe that bubbles can be created without extraordinary central bank action, which is true, the injection of trillions of dollars into the financial system in a few short years and what happens when it has to come out should be top of mind for any investor in any asset class, particularly now that it appears we are closer to the end of this phase of the experiment. Listen to people in just about every corner of the financial markets, from equities to credit, and this is the topic. But it's striking that instead, Silicon Valley startup investors seem more interested in how they can get in on the hottest deals, convince founders they're friendly, etc. That should be of concern to everybody in Silicon Valley, including the entrepreneurs who will likely find themselves in a much different world sooner than they expect.

jacques_chester 13y ago
My point is that overreliance on monetary inflation as the single systemic driver is simplistic. Is it a cause? I think so. Is it the only cause? Not even close. There are so many other confounding factors at work that it is insensible to sheet it home purely to monetary factors. Stuff like "large capital institutions in the USA are comfortable with venture investing", "shares have underperformed for most of the past 6 years", "it has never been cheaper or easier to launch a web startup" and "there are now billions of people connected to the internet" deserve billing alongside "the money supply is expanding", especially since monetary expansion has such lumpy and unpredictable effects on different asset classes at different times.
- 7Figures2Commas 13y ago
  I didn't suggest that easy money was the single driver, or even the primary driver. But the financial system rarely rewards those who choose to be ignorant. Individuals and institutions investing large sums of money in any asset class today who are not thinking about the unprecedented experiment that is taking place and considering how their investments could be affected by changes in policy are more than likely to end up losing money, perhaps far more of it than they ever could have anticipated. And in some cases, far more of it than they actually have.
  - dualogy 13y ago
    > But the financial system rarely rewards those who choose to be ignorant How sure are you about this?.. ;)
    - 7Figures2Commas 13y ago
      Quite. You'll find relatively few accidental millionaires and billionaires in the financial markets. And the markets are very efficient at taking back gains from the small number of wilfully ignorant fools who get lucky.
- phillmv 13y ago
  >My point is that overreliance on monetary inflation as the single systemic driver is simplistic. Oh, but of course. I mean, it's crazy non linear system and we don't even know all the variables. Any cause in particular will be insufficient to account for the whole. So, yeah, startups are doing so well because software is eating the world, but amidst all of the narratives most people go with rarely to people seem to consider the role that the economy is having on the industry. Of course it's non the single systemic driver, but it's certainly a catalyst if not a multiplier - and it's rarely discussed.
  - jacques_chester 13y ago
    Rarely discussed? I disagree. There is a strong contingent of mises.org followers hereabouts; every time anything vaguely related to economics or the SV bubble is discussed someone bursts in to breathlessly update us on Bernanke's dastardly doings.

jacques_chester 13y ago

My point is that overreliance on monetary inflation as the single systemic driver is simplistic. Is it a cause? I think so. Is it the only cause? Not even close. There are so many other confounding factors at work that it is insensible to sheet it home purely to monetary factors. Stuff like "large capital institutions in the USA are comfortable with venture investing", "shares have underperformed for most of the past 6 years", "it has never been cheaper or easier to launch a web startup" and "there are now billions of people connected to the internet" deserve billing alongside "the money supply is expanding", especially since monetary expansion has such lumpy and unpredictable effects on different asset classes at different times.

7Figures2Commas 13y ago
I didn't suggest that easy money was the single driver, or even the primary driver. But the financial system rarely rewards those who choose to be ignorant. Individuals and institutions investing large sums of money in any asset class today who are not thinking about the unprecedented experiment that is taking place and considering how their investments could be affected by changes in policy are more than likely to end up losing money, perhaps far more of it than they ever could have anticipated. And in some cases, far more of it than they actually have.
- dualogy 13y ago
  > But the financial system rarely rewards those who choose to be ignorant How sure are you about this?.. ;)
  - 7Figures2Commas 13y ago
    Quite. You'll find relatively few accidental millionaires and billionaires in the financial markets. And the markets are very efficient at taking back gains from the small number of wilfully ignorant fools who get lucky.
phillmv 13y ago
>My point is that overreliance on monetary inflation as the single systemic driver is simplistic. Oh, but of course. I mean, it's crazy non linear system and we don't even know all the variables. Any cause in particular will be insufficient to account for the whole. So, yeah, startups are doing so well because software is eating the world, but amidst all of the narratives most people go with rarely to people seem to consider the role that the economy is having on the industry. Of course it's non the single systemic driver, but it's certainly a catalyst if not a multiplier - and it's rarely discussed.
- jacques_chester 13y ago
  Rarely discussed? I disagree. There is a strong contingent of mises.org followers hereabouts; every time anything vaguely related to economics or the SV bubble is discussed someone bursts in to breathlessly update us on Bernanke's dastardly doings.