[onlyrealcuzzo]

This notion that money isn't cheap doesn't make sense to me.

If interest rates are 2% and inflation is 2% - borrowing money is free.

If interest rates are 10% and inflation is 80% - you get paid to borrow money - which seems cheaper than free.

We're obviously not in that situation - but we had interest rates at 2% with inflation at 10% - this was the cheapest money was in a long, long time.

Now we have (short term) interest rates at 4% - and inflation is >4%.

I get that it's not as cheap as 2021 - which would be necessary to maintain the asset bubble. But we still have negative real interest rates (at least short term). So money is still cheap, right?

[KptMarchewa]

>If interest rates are 10% and inflation is 80% - you get paid to borrow money - which seems cheaper than free.

You still have to generate that 10% return.

[Aperocky]

yes, in this situation the economy is literally self combusting, funnily enough this number is actually real just a few months ago in a significant sized economy.

[phpisthebest]

The risk with these business loans is they are short term, and often are just rolled over and over again at newer rates

So with the fed indicating they will keep raising rates in order to invert that statistic it would not be a good idea to incur massive amounts of debt you can not pay off when rate go more than inflation, which they will have to do

[sam0x17]

We also have a bunch of young people who have never seen a recession in these positions now, something to consider. FUD

[rybosworld]

Which young people have never seen recession?

Early 2020 there was a covid recession

2007/2008 there was a severe "recession" (depression)

[TecoAndJix]

Compared to 2001 & 2008, the 2020 recession was a blip on the radar. I graduated high school in 2009. My entire adult life to this point has been in a prosperous economy. COVID felt "different" (it was a pandemic, 100 year event kind of thing) to now. These layoffs have me worried for my family and what it could mean for our future.

[lamontcg]

It really is amusing to see how much HN thinks that times are tough right now and the talk of the current economic conditions as a recession. It seems like the majority of HN weren't graduated from college in 2008 yet or else they've somehow managed to forget what that was like or just weren't paying enough attention. And the ones that just found it hard to get a job out of college probably weren't watching the stock market closely and don't seem to remember how bad things got after the Bush administration let Lehman collapse and when we nearly "broke the buck" and Congress had to act to prevent a total financial collapse. We have 3.5% unemployment right now, not 6% and rising 0.4% every month.

At the same time nobody seems to be paying attention to how rapidly the Fed raised rates this time compared to the build-up to 2006-2008, and while everyone talks about low rates for over a decade caused malinvestment nobody seems to be doing the very obvious math of what is going to happen when higher rates destroy it all.

[onlyrealcuzzo]

2009 was not a prosperous economy. The economy was quite bad until late 2011.

You started off your adult life in a pretty bad recession.

Maybe college insulated you from that.

2020 was shorter than 2001 - but MUCH worse. 2001 wasn't very bad unless you worked in tech in The Bay or invested your life savings in Internet meme stocks.

[alephnerd]

Because HN is basically filled with Boomers at this point, maybe most commentators don't realize that there are different segments of young people.

Those who were in the Class of 2020 and above got FUCKED big time hiring wise.

Those who were in the Class of 2008-2011 got FUCKED big time hiring wise.

Everyone who started their career between 2012-2019 (like me) have had an amazing ride. We could jump companies at the drop of a hat and 1.5x-2x our TC, stocks were constantly rallying, and it is this group that started to enter middle management and/or build startups with YC. And it is this group that has never experienced a real recession.

PS. What is happenning in tech right now is nowhere near a recession. I've seen the stress my parents had during the Dot Com Bust and 2008. What's happening right now is nowhere near that bad.

[ghaff]

And hopefully it won't get anywhere near dot bomb levels for tech.

I was very lucky to find a new (lower paying) position during that era and the company I joined subsequently barely got through some of the aftermath. But I knew a lot of people from technology companies who basically got out of the industry and, for at least some of them, their careers/finances never really recovered.

[alephnerd]

Amen to that!

At least talking to people who went through 2001 and 2008, it looks like there are more opportunities across the board now. If you got laid off from $randomYCStartup as a SWE or SRE, you can still land a decent paying IC role at one of the 100s of upper market companies that exist. BoA, Honeywell, Target, etc are still hiring SWEs and paying decent salaries, as are the hundreds of upper market B2B tech companies (eg. Okta, Meraki, Oracle, etc). It may not seem sexy like working at Google or Meta, but it ain't a bad living either. Sadly, a lot of my peers have this sense of hubris that anything less than FAANG or a late stage startup spending tens of millions of dollars in PR is career suicide, which is honestly stupid in an industry as skill oriented as ours

[shagie]

Fibber Magees, Mountain View (now St. Stephen's Green). Out of work people in tech at the pub at 2 in the afternoon. On their right, a beer. On their left, a pager that isn't buzzing (hoping for a message from a recruiter).

Talking to the guy who got a job serving gelato next door and a guy who is about to start work 3rd shift at Blockbuster as a cashier. They've got masters degrees in CS but when the company closed up quickly, they had to find a job quickly that paid some of their bills (rent in Mountain View wasn't cheap).

Those were not happy times.

I was fortunate. My manager had previously worked at Apple in the bad years and at the first signs of future possible problems had gotten two open reqs for our team approved all the way up the chain to the C level. While the reqs were approved she really dragged her feet on writing up the job position and after a bit, HR got tired (I presume) asking her and then we had a hiring freeze and well, that was the end of that... except that we had two C level approved reqs that were unfilled. Then contractors weren't renewed... and then contracts were ended early. When the layoff happened she was told to lay off two people from a team of four. She laid off the open reqs and pointed out that if the director levels were to force her to lay off some from the team, she would immediately rehire them back in to those open reqs. So, our team survived intact. That was 2001. However, in 2009 she wasn't my manager anymore (and had gone to do other things).

[xtracto]

I graduated from Software Engineering in 2001. Doing a 3 year postgrad degree was one of the best options work-wise at that dark time. We are not that deep, for now, at this time.

[ghaff]

Fortunately, I never needed to come up with a Plan B as I fairly quickly landed a job with someone I knew at a small competitor of the the company I was laid off from (which was still doing OK although that changed). But I never got so much as a nibble from anyone else.

[operatingthetan]

>Because HN is basically filled with Boomers at this point, maybe most commentators don't realize that there are different segments of young people.

Generalizing 'boomers' as over 30 and giving a lecture about it while at the same time complaining about people not recognizing segments of other generations is an amusing lack of self-awareness.

[haskellandchill]

> Because HN is basically filled with Boomers at this point

Have anything to back that up?

[alephnerd]

Gut feeling and general tone. I'm Gen Z and the way people talk on this forum is tonally and syntactically different from my cohort. Also, ime, most early career peeps prefer subreddits to HN - HN has a bit of a smartass/toxic quality to it that has turned off just about every friend of mine below 27 who I've tried to evangelize HN to. Also, down the grapevine at least, most YC people don't really use HN anymore - they have their own private Founder Board that they prefer perusing now.

[kazinator]

Are you emulating the way people write in this forum? Because I'm not detecting those syntactic differences in your own posts. It looks like normal English to me.

[haskellandchill]

Well millennials aren't boomers, but I agree Gen Z is a minority here. Reddit also has "smartass/toxic" covered but I'd welcome any subreddit suggestions.

[red-iron-pine]

The boomers were born just after WW2. Most of them are going to be 60+ and many are going north of 70. I highly doubt the majority of HN are that old, or even a large segment (33% or more).

Gonna be a lot of Gen X and Millennials, probably a disproportionate number of < 35 tech bros

[alephnerd]

As I commented above,

There has been a semantic shift with the word boomer - for older people it means the baby boomer, but for much younger people (like Gen Z) it just means anyone 30 or above.

[nverno]

The higher they go, the riskier it gets, though. You wouldn't want to take a loan out at the peak and be left holding the bag.

[quickthrower2]

Inflation doesn’t pay you. Revenue does.

[onlyrealcuzzo]

If inflation really would continue at 80% for the year - and you can't pay back a ~10% loan - it means your business is going down by ~70% per year...

There's always risk - but I don't think it's as risky as you might think.

Even if times are bad because inflation is high and your business drops by ~50% - you'll still come out ahead.

[quickthrower2]

Inflation is a measure of how certain products and services go up in price, but not all, your product might be out of demand as people’s stagnant wages are consumed by rent and food increases. And then there is the issue of costs going up!

That said: There will be opportunities if you can borrow at 10% and stay solvent to invest in something well through in this extreme case.

[SpicyLemonZest]

Businesses don't transact in inflation-adjusted dollars, so this analysis doesn't work with respect to the practical decisions they face. When you go to get a loan at 4% (plus whatever spread), the interest you're paying on that loan doesn't "adjust against" any price increases you charge to your customers or have to pay to your suppliers. This is especially true because those price changes are 4% only on average; your costs might go up 10% rather than 4% and your customers might not accept any increase.

[dylan604]

If you depend on sales to consumers, then that 80% inflation might have a very negative impact on those sales to consumers so that 10% interest is unobtainable.