#one: saying the FFR (federal funds rate) is why ‘start up’s’ in the gig economy are failing | Explore Tumblr posts and blogs

we-re-always-alright · 1 year ago

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any time I see people tying minor world events to economics I’m like. that’s not how economics works. I know you want it to be how it works so you can blame someone. but that’s not how it works in any country or global economy.

#it’s like saying gravity only exists on Tuesdays #this is directly looking at two things:#one: saying the FFR (federal funds rate) is why ‘start up’s’ in the gig economy are failing #and two: someone saying we should cause a bank run (multiple bank runs) when we’re still in pre-recession waters #per point one: the FFR is for banks and credit unions and determines what rate at which lending happens #it effects things like housing; car loans; savings accounts; etc because it sets a floor at which interest rates have to be #it does not affect how much money VCs pour into companies they think are going to be worth billions #which VCs pour money into them so they get a % of the company as stock #so they’re incentivized for the company to do well and make them a profit when they go public #not to say these companies might not have traditional bank loans but it’s very unlikely for the amount they’re spending #additionally as we all should have learned from the Glass-Stegel act and the 08 crash #banks need to keep their commercial investments and consumer investments separate #so yes these companies are failing…. but for other reasons like increased regulation; changing preferences in the consumer and economy;#but MOSTLY they were unsustainable businesses at the onset; they didn’t need to be profitable; just go public and make billions on stock #now for point two this one is simple: IF YOU CAUSE MULTIPLE BANK RUNS #THEY BECOME A SELF FULFILLING PROPHECY #AND THEN MORE BANKS FAIL AND WE GET A RECESSION #all caps were necessary here #if you look at the Great Depression (a great example of a banking panic)#not all of the banks were initially failing #but by people panicking about their money (and a lack of the FDIC at the time)#but because people panicked and pulled their money out the banks failed anyway and caused the worst recession in US history #so yes feel free to cause a banking run and tank the economy #it’s likely Europe will enter a recession in the next 6 months so please exacerbate the situation #(which because global economy will push us further into possible recession)#I’m sure people will have plenty of time to feel smug and superior while sitting on a mattress of cash and looking for jobs #ugh anyway bad economics bothers me #just cause you watched a dude rant about it on YouTube (when he doesn’t know what a Phillips curve is) doesn’t mean you know economics #thoughts? thoughts #or: wHy DoNt YoU jUsT bAlAnCe ThE eCoNoMy LiKe My ChEcKbOoK

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