Comment by zrn900 | Hacker News Reader

Comment by zrn900 | Hacker News Reader

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Reasons:

- The zero interest economy ended due to dollar losing its uncontested foreign exchange currency position.

- Now neither Fed nor private banks can print dollars and lend them with low or zero interest to constantly infuse the economy with money.

- Fed raised interest rates to stem inflation and also (in their words) to bring down wages.

- This caused the cash-awash economy that rode on the stock market and the inflated values of stocks and startups valued over 'growth' and 'potential future revenue' to end.

- Capital started avoiding the earlier paradigm of dunking endless money on startups and stock market and started going for bonds with high interest rates.

- Hundreds of overvalued startups and companies with over-bloated stock valuations started doing layoffs to shore up the falling stock prices.

- Copycat layoffs cascaded - MBAs pushed the boards to do what everyone else was doing - monkey see, monkey do.

- ~450,000 highly qualified, educated, experienced individuals were laid off to make majority shareholders happy, at the risk of US tech sector losing its steam - shareholder comes first, everyone including the society can go to hell

Disastrous trend for both US tech industry, the US society and its prospects in general. But hey - the majority investors and investment funds will be bloating their unusable hoards of numeric wealth even more...

Isn't this exactly what austrian business cycle theory predicts?

>According to the theory, the business cycle unfolds in the following way: low interest rates tend to stimulate borrowing, which lead to an increase in capital spending funded by newly issued bank credit. Proponents hold that a credit-sourced boom results in widespread malinvestment. A correction or credit crunch, commonly called a "recession" or "bust", occurs when the credit creation has run its course. The money supply then contracts (or its growth slows), causing a curative recession and eventually allowing resources to be reallocated back towards their former uses.

> Isn't this exactly what austrian business cycle theory predicts?

Not exactly. That theory relies on actual economic theories that were conceived for normal situations. (and even at that, most of the economics logic is still based on just guesses and truisms).

But the dollar situation was far beyond anything anyone could imagine: The US kept forcing the dollar to be used in foreign trade, making the dollar de facto reserve currency. This meant that ANY kind of economic activity anywhere in the world was already monetized by the US through the dollar. Random country A prospers, the US prints dollars without suffering inflation thanks to the dollars that was being used in global trade.

So in a way, the US was literally monetizing the entire world whether the rest of the world wanted it or not. Its an incredible paradigm that was not seen before. The overbloated US military existed for that purpose: To bash the heads of small countries that dared dump the dollar - Iraq, Libya et al are examples of this. Saddam started using Eu to sell Iraqi oil, Gaddafi was talking about doing either that or creating an African currency. It worked for a long while.

But what the US did at the start of the Ukraine war ended this paradigm. Seeing how Russia, a superpower, got their dollar holdings stolen by the US made all countries think that nobody would be safe as long as they relied exclusively on the dollar: One foreign policy dispute one day and boom. So they started dumping the dollar and moving to their own currencies or Yuan.

And the incredible and never-before-seen paradigm of a country being able to monetize the entire world ended. The sanctions and the theft of Russian assets were the dumbest things that the US elite in control of their administration did in its history. They even went after the assets of individual Russians who weren't even close to the Russian government and its governing elite - which immediately told every single rich person in the world that they would never be safe with the dollar regardless of their political positions and affiliations. So the dollar exodus started.

Among other dumb things that the US elites did in recent years is banning China from certain technology products and literally pushing them to develop their competitors - without China having to break WTO rules too, as they were banned from buying those products legitimately.

With a governing elite like that, the US does not need an enemy.

Wow, that 450k number really is large when you compare it to the number of software engineers in US to be roughly 4.4m (by 2022 estimate [1]). I think the former may include professions/roles other than software development, but it's a chunk o change for sure.

[1] https://qubit-labs.com/how-many-programmers-in-the-world/

They laid off another ~45,000 since the start of 2024 as far as I know. Likely the dumbest thing that these incumbent companies can do - they laid off entire EPDs, professionals who have a working history with each other, close links etc. Ie, in a way, they laid off entire startups that will immediately turn into their competitors and eat their lunch. And its already happening:

https://www.wired.com/story/tech-layoffs-are-feeding-a-new-s...

This is the dumbest thing about the destructiveness of capitalism: In its quest for ever-increasing profits, it even destroys its own business for short term profit.

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