Oh man...
How I miss the days when the FED, the European Central Bank, and so many other Western economies were doing Quantitative Easing.
NOK was strong. Interest rates were close to zero. Capital-intensive investments were not an issue. So many unicorns were being born. We would drink champagne all day... (at least I would).
Valuations made no sense, but it didn’t matter. You just had to say “AI” or “climate tech” and voilà, someone wired you €10M.
Startups were “pre-revenue” — a polite way of saying they didn’t sell anything, but somehow were worth $100M.
Rounds could get oversubscribed in 48 hours. Or less.
There was so much capital in the system that people started talking about doing more than just making money. They also wanted to make good... To have an impact....
But ever since we entered the Quantitative Tightening period, we have nothing of that.
Before, capital and credit markets were expanding. Now they’re contracting.
Before, asset prices were soaring. Now they’re correcting.
Before, we all thought we were getting richer. Now we understand it was just the effects of inflation.
Well, the truth is that what we were experiencing was not real. It was artificial. Or in other words, this was not real demand driven by real needs. It was stimulated demand, driven by central banks expanding their balance sheets through secondary markets asset purchases.
And the truth also is that never in the history of modern monetary policy have we seen the level of QE and QT that we’ve seen in the past decade.
So no one really knows how bad this will get, how many people will lose their jobs, their savings or even their homes, and for how long the consequences of these irresponsible policies will last.
I have the feeling what we’re about to see will be studied in the economics books of our children, our grandchildren, and the children of our grandchildren.
I have the feeling it will be quite of a rough ride.
But hey, at least we had fun.
