From my view, the argument behind the article is not very strong. His best data point is that he talked to an entrepreneur who didn't know what to do with $20 million.
The argument that technology start ups don't create value seems to be disproven by the current valuations of Google, Facebook, Twitter, etc.
I rarely practice pedantry, but this usage's (to me) almost-plausible unreality twisted my mind. I suspect it signals the quality of aspects of the article that are less susceptible to verification.
I don't see how any sector of the economy is responsible for the inevitable bust that follows an inflationary boom. We had massive inflation over the last 8 years and when that inflation started to be curbed the bust that followed is no one's fault but the people who started the inflation in the first place. California's budget woes are the result of spending too much during a boom not realizing that we were all living in a fantasy world.
The article doesn't address the fact that intellectual property is a form of wealth that is perfectly fine to invest in. Yes there was a lot of errors made during the boom but that's true of all of the booms including our most recent stock and housing bubbles.
I'm still long on the technology industry as a whole. I think there's a lot of good work still to come and I'm looking forward to seeing it. I just hope that the next time inflation comes our way we identify it sooner and act accordingly.
Inflation is an increase in the money supply. Rising prices are a side effect of that increase. The government has many reasons to hide and distort real rising prices including TIPS and just generally wanting to stay in power.
Inflation was directed by the federal reserve for 8 years at a record pace. When the fed lowers interest rates they in effect increase the money supply through the expansion of bank credit which is the primary means by which money is introduced into the economy.
Nope. http://en.wikipedia.org/wiki/Inflation "inflation is a rise in the general level of prices of goods and services in an economy over a period of time."
An increase in the money supply is an increase in the money supply. If the increase matches other factors, all is generally good. If it doesn't bad things happen.
> Rising prices are a side effect of that increase.
Rising prices are inflation. They happen when the money supply increases faster than the relevant function of wealth and "velocity".
> When the fed lowers interest rates they in effect increase the money supply through the expansion of bank credit which is the primary means by which money is introduced into the economy.
"the primary means"? The fed discount rate isn't that effective at affecting the money supply; it has a marginal effect. If it was an effective means, they'd have used it. Instead, they're printing money.
The argument that technology start ups don't create value seems to be disproven by the current valuations of Google, Facebook, Twitter, etc.