[uLogMicheal]

You missed a step, it goes from the central banks to the LPs to the VCs. The big hedge funds that get all of that low/zero interest money are certainly active in private equity AND forcing their behaviors/policies on companies far and wide.

[imtringued]

You're saying this as if the central bank is forcing money into the economy when it really is a pull based system. The commercial banks ultimately decide how much money they want to issue and if they think you have a viable business they won't hesitate to give you a loan.

[littlestymaar]

Except you absolutely don't need any connection to the central bank to benefit from their monetary policy.

[uLogMicheal]

Want to explain? I doubt bank loans were that much easier for startups in times of low interest and if anything the inflation hurts bootstrappers worse.

https://www.politico.com/news/2020/06/07/wall-street-fed-bai...

The Fed selected BlackRock to run a groundbreaking program to buy hundreds of billions of dollars in debt from large companies slammed by the coronavirus crisis.

Certainly these connections help?

[littlestymaar]

> I doubt bank loans were that much easier for startups in times of low interest

Low interest rates doesn't mean loans are “easier” (this is going to depend on the risk policy of the specific bank, and is mostly unrelated to the interest rate), but it lowered the interest rate you'd pay for every loan no matter who you are (I personally bought a house with a .7% interest fixed mortgage in 2019, I didn't have to personally know Christine Lagarde for that).

> if anything the inflation hurts bootstrappers worse.

Low interest don't drive inflation up (we've had anemic inflation for a decade of low interest), if anything, inflation leads to interest rates hikes.

[uLogMicheal]

You're arguing with economics here...

https://news.stanford.edu/2022/09/06/what-causes-inflation/

Inflation rises when the Federal Reserve sets too low of an interest rate or when the growth of money supply increases too rapidly – as we are seeing now, says Stanford economist John Taylor.

I never said you needed central bank connections to get a home loan. To get infinite runway on unsecured risk is a very different area of privilege than secured home loans.

[littlestymaar]

> You're arguing with economics here...

No, I'm arguing against die-hard monetarists who still buy Friedman's bullshit 25 years after the Asian financial crisis and 15 years after the subprimes crisis. Japan has had more than two decade of low interests with no inflation, and the rest of the world had one decade with the same result, but as these people are cultists, they don't care about facts and they never did.

Inflation isn't a money problem, it's a supply problem coupled with a market power one. (Nor is inflation a “diminution of the value of money” either).

> To get infinite runway on unsecured risk is a very different area of privilege than secured home loans

This is goalpost moving.

[uLogMicheal]

I appreciate the context and will research the differences you shared; this topic interests me.

> This is goalpost moving.

My comments have been under the context of the post, VC funding. With VCs, you often find companies spring from nowhere with a marketing blitz or infinite runway in an exclusive access phase. This is not accessible to the common person, and in my opinion stems from a modernly masked form of nepotism. This is also not accessible in a world that requires near-term profitability, so maybe more of this will be broken in the years to come by economic realities.

[imtringued]

>You're arguing with economics here...

Japan did absurd amounts of QE and low interest and all they got was less inflation than the rest of the world.

Your referenced article is also ignoring the obvious elephant in the room which is the opposite of monetary policy. The US government and governments in Europe did a lot of fiscal policy. The stimulus checks and loans were a far more effective way of increasing inflation than monetary policy can ever be, because monetary policy can be reversed by the private sector and therefore make it ineffective at achieving any outcome. QE for example, is a meaningless operation. It has no reason to exist.

[consilient]

> Want to explain? I doubt bank loans were that much easier for startups in times of low interest

A higher risk free rate means risky investments like VC funds are less attractive.

[uLogMicheal]

but VC investment was at a high while interest rates were low, and we now see a contraction in venture investment now that interest rates are rising?

[disgruntledphd2]

Yeah and what gets funded will change. Ultimately higher interest rates mean that time to profitability should decrease in order to make it an attractive investment.

Honestly though, VC is such a tiny, tiny percentage of the investment world that maybe this won't happen (but the vast majority of funds are gonna fail to return their capital as they were funded in a ZIRP world and need to invest in a world with higher interest rates).