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Comment by cs702 | Hacker News Reader

Very sobering.

If more companies follow Sequoia's advice and quickly decide to cut or postpone spending in anticipation of a potential slowdown, their vendors and employees will react by cutting or postponing their own spending, leading yet others to do the same, fueling a sudden and self-reinforcing feedback loop of global contraction in economic activity. Perhaps the stock market is pricing such a dire scenario.

Let's hope it doesn't get that bad.

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Journeyman executives often make decisions that are pro-cyclical.

Maybe this is needed from time to time, to filter good and bad ideas / behaviour.

I'm guessing you were being facetious, but in case you were not, certainly, it's better to let individual companies fail over time at the expense of localized loss/capital rather than decimate the system just to see who survives. For one, you might be killing companies with actual promise in their infancy. Second, when only one among many fails, it may be slower to identify losers but there are landings for those who suddenly find themselves out of job. And even when things are good, finding yourself without a job is still traumatic.

Well that’s the thing, the economy seems to fall out of balance too often. It’s either WeWork times or decimating-the-system times. Don’t we need the middle ground more, where the good companies can stand out?

Is this a political or a central-bank policy issue?

I'm not sure, it's easy to think of the boom times and the awful bust times, but we've had plenty of 'meh' times, i.e short recessions / contractions around the globe. I'm not an expert and I always fear I have just enough knowledge to believe I know what is going on. However, I did buy into the argument that, at least in the US, slashing interest rates and giving a huge tax cut during the boom of the last few years was a bad idea. A bad idea since, there isn't much left to cut or slash when times turn bad or some external event (like coronavirus) throw a ton of uncertainty into the mix. I wish you could set up tax rates / fed rate on an automated control feedback system. It's probably why until recently, the fed had been kept insulated from politics, but obviously, even if they were not being politicized of late, it's not that simple.

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