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> But who supplies the VC's with money? Ultimately, all "money" these days is supplied by central bankers. There aren't a lot of good ways to short this stuff
by fredkbloggs 11y ago
> But who supplies the VC's with money?
Ultimately, all "money" these days is supplied by central bankers.
There aren't a lot of good ways to short this stuff, at least if you aren't someone like BlackRock. That's especially unfortunate because it means no one is going to make money on the downside, offsetting others' losses. In every transaction there is still a winner or a loser, it's just that in this case the winner is going to be the people selling chunks of worthless companies for big money today. Just like in 2008 the winners were people who sold overpriced and overhyped real estate in 2006 and 2007. So if I were you, I'd go found a worthless company, pay the "tech press" to hype the holy living fuck out of it, raise a dozen rounds at obviously nonsense "valuations", and use the money to pay yourself and your friends nice fat salaries and lots of silly perks for the next 3 or 4 years while everything implodes around you. That's not how you short the madness, but it's how you profit from it which is really what your question is about.
- x5n1 11y agoThe bank always wins. It's funny we talk about central bankers, but they are like a shadowy supra-government syndicate pretty much always winning at the cost of everyone else. And yet no one asks why.
- wjnc 11y agoCan you draw the link from central bankers operations to the inflow of cash to VC's? Because most CB operations are either setting rates (where I understand they at least have to stay in between some bandwidth the market will appreciate, or else face a situation like Switzerland), or transactions buying assets (mainly bonds). Both do not directly accomplish the inflow of money into VC. VC's don't leverage (no banking license). I guess VC-firms don't borrow money at 1%, because no collateral?
- dtap 11y agoIt is desire for yield. If you take the risk-less rate down from ~4% to 0%, then you can shift the rates for higher risk asset classes down similarly. If VC is historically a 12% return asset class (properly risked), LPs will demand the asset more, driving up supply and down the return until it is in-line with the risk profile (perhaps 8%?).
- jeremyt 11y agoThe government leaves the cheap money door open to banks like Goldman Sachs. Goldman Sachs lends rich people a pile of money at 1%. Rich people invest that borrowed money with the intention to arbitrage the difference. Works great, until the party ends when interest rates start increasing or the assets plunge and one has to cover their leverage, whichever happens first.
- deleted 11y ago[deleted]