Friday, February 13, 2015

How Do You Know If You are at the Epicenter of Mad Fed Money Printing?

When your local paper posts a  story like this, which appeared in the San Francisco Chronicle this morning:

To make $450,000 a year, or join a startup, that is the question

It’s a question we’ve all heard in the Bay Area: Should I make big bucks working for X company or join a startup?

A two-year-old post on this topic is still sparking discussion on online question forum Quora. A user writes, “I’m 28 and making $450,000 a year at Google. I love my job and everything I’ve been told indicates I’m on the fast track career wise. Will it ever make sense for me to leave for a startup?” The responses are mixed.


  1. I don't see how Google qualifies as being close to the spigot. Google is not a bank and doesn't sell to banksters. Google gets its revenues from ad sales to businesses of all sizes.

    1. You are a perfect example of the delusion. IBM has a better return on assets, trades at half Google's PE and isn't wasting money on crazy projects like Google glasses--which was junked.

      And you think Google is trading like this becasue what, Sergey is a genius?

      I go with Wenzel, there is too much Fed crazy money in Silicon Valley.

    2. I am making no statement about Google's valuation or business model. I merely ask how Google qualifies as an early receiver of printed money ("epicenter of mad fed money printing") vs. every other business.

      I'd appreciate anyone stepping through how the newly printed money first makes its way to Google preferentially to, say, Caterpillar. Start with the pocket of the banker selling T-Bonds to the Fed.

    3. You have no idea how Silicon Valley works. ALL money in Silicon Valley is Fed tainted money, It all comes from Venture Capitalists who control the entire show, from regulating the sector to money inflows.

    4. Since an answer to my question about tracing the money flow from the Fed has not been offered, I'll guess at one possible scenario. The typical VC limited partner roster includes pension funds, university endowments, foundations, insurance companies, and funds of funds. To the extent that banks with bond trading desks buy from insurance companies or funds of funds (seems plausible) then via this route some of the newly printed money could make its way to Silicon Valley VC's and then to startups against which Google must bid for talent.

      If this hypothesis is true, then startups receiving VC funding alone would be early recipients of some Fed money. These startups could then bid up prices in Silicon Valley for everyone. Google, Apple, and other businesses in Silicon Valley earning revenue from the general public outside Silicon Valley but paying costs inside Silicon Valley would be net victims of Fed money printing.

      Whether this hypothesized Silicon Valley startup route is a shorter/faster route to the general population than the route via Caterpillar or any other business which might borrow or take investment from said banks is not clear to me.

    5. What about those long-term projects (like robotics) that Google is dabbling in? Those kinds receive a disproportionate boost to profitability because of ZIRP? I'm not saying that is the definitive answer but it might be a starting point.

    6. Last quarter Google earned $18.1B in revenue on opex of $13.7B for income of $4.5B. I don't think it's relying on borrowed money for anything.