

Ask HN: The Effects of the New Bubble - calebhicks

There are dozens of stories pointing to a growing bubble in startupland, especially in Silicon Valley. Many of the stories have been on the HN homepage the last couple of days.<p>My question is, what effect will this have on the economy at-large? With most of the bubble investing happening in VCs and other private investments, how will this affect the public markets?
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knowsnothing613
It'll be a neglible effect. The startup bubble will only hurt angels/VCs who
continue to dump money into shitty/me2 companies, so they can collect their
10% management fees.

The real bubble is in commodities. All the extra $$$ the Fed is pumping into
the US economy is leaking into the emerging markets, where banks can get a
better ROI on their bets, instead of investing in US small businesses.

This asymmetry between the stagnant developed economies, and the bustling
emerging markets may lead to global stagflation, from high inflation, and high
unemployment.

The effects will be increasing political instability throughout North
Africa/Middle East, that could enter Europe visa via her large North African
diaspora.

Also, China may have to take greater action curbing its money supply, which
could push the all resource-centric countries (Chile/Australia/Canada) into
recession.

The solution is to incentivize big banks to give out more loans to small US
business, which make up the bulk of US employment, instead of making
abstracted bets on financial instruments.

The American financial system is broken, and with it American capitalism,
because capital isn't reaching the most product parts of the economy. Rather,
it's going to lucrative, short term bets, that may be unproductive for the
economy in the LONG run.

