>" The problem isn't that there's a recession coming, the problem is that there hasn't been one for a long long time."
I agree with you, but the persistently low interest rates have also fueled malinvestment and speculation on relatively low-potential, high-risk, long term investments.
This even spreads to technical architecture, many tech teams stopped exercising fiscal discipline in how they design services. This emerges in tiny low traffic micro-services, 4 teams building the same service, un-neccessary data allowed to accumulate in expensive data0stores for a rainy day and more.
When some of these startups need to layoff, I'm curious if they'll actually be able to maintain KTLO operations on their reduced staffs without making large product cuts.
Interesting! When I was running a VC-backed unprofitable startup, we chose speed over financial discipline. We built an infra that wasn't optimized to reduce costs. When we switched to profitability, we had to dramatically change our development practices to maintain the same app with fewer people and less code.
Now I actually wonder if there would be room for some type of consulting in cost optimization field. Someone coming in and making inventory of data and services run and then recommending how to save on running costs and so on...
As I recall, there was a market for that back in the 2000s to help determine what was salvageable from a dead/dying company. The business would probably be much larger and more complex today given that 3/4 of the problem will be disentangling what's actually needed vs. what's nice to have between 10+ teams which are no longer around.
recessions are usually jolly good times for all sorts of restructuring consultants and lawyers. good news for MBA students, they can ditch their Python classes, it's back to cost cutting /s
Yeah I didn't go into details but that's basically what I meant. Low rates are the reason we haven't had a clear-out. You need the occasional minor crisis as a check on crazy investments. It's also a time for your Madoffs to be revealed, rather than be given enough time to find a real business model and brush away issues. It's not even that bad if some properly well run firms are killed, if they're doing something useful they'll be reinvented.
I don't understand why this is a "but". That's the primary reason we haven't had a recession for so long. We 100% would have had one in late 2018 if there was no Powell pivot.
since you're so outspoken about it, you may be interested in learning that fractional reserves is not how banking works (someone with an Austrian econ bent might be tempted to say it's actually worse than that):
I agree with you, but the persistently low interest rates have also fueled malinvestment and speculation on relatively low-potential, high-risk, long term investments.