Hacker News new | ask | show | jobs
by strict9 241 days ago
Interesting insight. High interest rates keep new startups low. Well, not counting AI startups I guess.

And the lack of new (non-AI) startups allows bloated incumbents to get by without innovating or offering new products. Quality destroying measures like offshoring and outsourcing are easier to pull off. As is allowing services and standards to slide.

Maybe we'll only know once interest rates come back down. Or once the AI-replacing-workers veil has been lifted.

I think this dynamic is an under appreciated source of the chart that shows the decoupling of the job market with the stock market [1]

[1] https://www.businessinsider.com/how-scary-is-the-scariest-ch...
2 comments
marbro 241 days ago
Interest rates aren't high, they're manipulated by the government and they're too low. When businesses, governments, and individuals increase their borrowing, as they are now, that means that the cost of borrowing, the interest rate, is too low.
link
Fade_Dance 241 days ago
>When businesses, governments, and individuals increase their borrowing, as they are now, that means that the cost of borrowing, the interest rate, is too low.

That's not necessarily the case. Credit expansion comes with healthy growth as well.

link
AndrewKemendo 241 days ago
Interest rates only go down to stimulate growth

If growth is happening with high interest rates then that means capital can remain out of the hands of the public but debt replaces it

If I’m a billionaire my goal is to own everything and have everyone in debt to me based on my personal currency I issue - like points or miles or a corporate debt vehicle for example.

Surely we aren’t seeing a increase in debt also right? /s

link
Fade_Dance 241 days ago
>Interest rates only go down to stimulate growth

The Fed targets price stability and employment, not growth.

Of course that is largely correlated with stimulating growth as a derivative of that, but certainly not "only" to stimulate growth. For example, the current cutting cycle has far more to do with inflation that it does growth. The Fed's primary concern currently is growth accelerating into more inflation.

There are other reasons for cutting as well. For example, funding stress. Repo funding stress caused an interest rate pivot not too long ago (and repo funding stress is rising once again, which will be a factor in the current rate decisions.)

link