What does it say about this entire industry if it seems like all of this supposed disruptive, revolutionary, making-the-world-a-better-place activity seems to be going away with a simple move from the Fed?
DoorDash is nice, but restaurants delivered food before that too. Uber is nice, but it's barely better than the taxis it replaced - at least in my city. Airbnb is a good option, but if it were to disappear, I'll just do what I always did - get a hotel room.
Considering that it tooks tens of billions of dollars to create businesses that were at best "nice to have", I have to wonder what's "disruptive" about any of this stuff.
Now that's in my home city. I cannot be the only one who got scammed by a taxi driver in an unfamiliar city when they took a deliberately circuitous route to the destination. Lesson learned: never tell the driver its your first time in <city>. If asked "is it your first time in <city>" tell them, "no, I come to <city> monthly for business".
I am not justifying Uber's sleazy behavior, both internally and with their poor vetting of drivers early on. But the taxi industry in the mid 2000's was just asking for disruption.
I have zero sympathy for this godawful exploitative company. If the world didn't see them with the rose-tinted tech shades, they would have the same reputation something like Nestle has - a greedy, reckless, and exploitative corporation.
where my girlfriend lives, in the suburbs, taxis don't exist, so uber/didi/cabify is the only option other than taking the bus (which doesn't run at night) or walking (which is dangerous, especially at night)
'disruptive' innovations are worse in important ways than the incumbents they challenge, but much cheaper; from the perspective of the consumer, this isn't true of rides from uber or lodging with airbnb, but from the perspective of the provider, this is extremely true of uber and airbnb, which are 'competing' with the taxi medallion mafia and the regulatory regime established to protect established hotel chains
getting a taxi medallion or getting licensed to open a hotel are enormously more expensive than signing up with uber or airbnb
Being the responsible person at a company is some weird mix between being a painter, a father, a helmsman and the leader of a battalion/cult.
Investing in treasuries on the other hand is very depressing considering that it doesnt give you any authority or ability to call the shots in the organization you are investing in (except for voting of course, but everybody can do that)
In places which are up enough on the Maslow pyramid startups and sports teams will always get equity financing regardless of interest rates, because they aren’t just a business, it’s something people do to find purpose.
And actually the real reason for Fed lowering interest rates is to allow people to finance their dreams via debt in order to get the best of both worlds: cheap financing and not having to part ways with equity and not having to share the helm of the company with anybody else.
It’s an anomaly that all that resulted in the explosion of VC/PE. Mostly because both people and banks were scared AF by debt post 2008 even though with low rates it was the moment to be bold not scared. Those who weren’t financed their dream very cheaply and retained control of it.
Its negative.
You can put massive amounts into TIPS
blablabla.
but of course the truth is that it's not the entire industry, it's not just the Fed, that fucking disruptive book is bullshit (most disruptors end up losing out as incumbents adopt), and the making the world a better place gang has 100000 spreadsheets and infinite amount of malaria bednets, but all they managed to do so far is that everyone and their dog now only associates them with that fallen crypto kid.
a bit more importantly, these super amazing "returns" and asset bubbles and stock market to the moons and quarterly make it rain bonanzas can only continue as capital amortization doesn't start eating into it hard.
and by capital I mean the culmination of the last however many decades of actual community and infrastructure building, not the nice financial instruments.
yes, low interest rates are here to stay most likely, because of all the extremely wealthy retirement funds of aging populations all over the developed world are buying safe assets, so the US Treasury can sell a lot of bonds.
the question is what are we going to do with this? the signs point to slowed incremental progress and general incompetent cycles of fake it till you make it cooperation (on all levels, from individuals to don't be evil companies to countries) and xenophobic populist outbursts of untreated change anxiety, dotted with hints of hope of more of the better stuff that's out there, like mRNA vaccines and other biotech magic, small modular nuclear reactors powering walkable cities without burning dead plankton, against a backdrop of war, pandemics, crazy AI and apathy.
Isn't it also dependent on inflation? Higher inflation = higher bond yields
general price level increase accelerates (inflation overshoots the target) -> central banks act to cool the economy (they conduct open market operations to remove liquidity, increase various knobs like interest-paid-on-reserves, basically the opposite of "quantitative easing") -> this has a knock on effect on corporate and governmental bond auctions -> bond interest rates go up
but this is a "closed loop" because the end result is that "inflation creeps back down to/below target level", and then bond yields go back to where they were and it seems that's mostly a function of the appetite for safe assets.
of course this might all be irrelevant if central banks basically switch to "nominal GDP targeting"
and one more small but very interesting piece in this puzzle (the jargon is not important, the "bonds stay on the balance sheet, so they are inconvenient" part is): https://libertystreeteconomics.newyorkfed.org/2023/02/unders...