I really dislike these takes on low interest rates.
As far back as the 70s (when interest rates were 8-15%), there have been random business ideas being started and shutdown (pet rocks, every airline ever, etc.).
We don't remember those because they shutdown 40 years ago. Today, we only see the successful ones that survived (walmart, fedex, etc.).
There's a legit question: why have long term interests declined over the past 500 years, accelerating in the past 50-100 years.
The answer to that more likely has to do with some very broad phenomenon: capital has been accumulating due to increases in energy availability. Human talent (that turns capital into something actual) is plateauing due to slowing of population growth.
Testable Prediction: we will have <1% fed interest rates again at some point before 2030, because the long term trend remains downward for now.
> why have long term interests declined over the past 500 years, accelerating in the past 50-100 years
The cost of money (that is, interest) is based on two things: the time value of money, which is the concept that an amount of money is worth more now than the same amount of money later (above and beyond inflation); and the default risk, that you may not get back some or all of the money that you lent out.
As the world became more stable over time, the default risk also lessened over time; and there's a good argument that the time value of money also decreased over time, as the quickening of the pace of technological advances meant that lenders could expect more returns over a shorter amount of time. Both factors combined to gradually decrease interest rates in the recent past.
If you believe that we are now in a new era of geopolitical instability, it's reasonable to bet on this long-term trend reversing.
> the time value of money also decreased over time, as the quickening of the pace of technological advances meant that lenders could expect more returns over a shorter amount of time.
Isn't this backwards?
In a world where money has no time-value, a world where a dollar today is the same as a dollar tomorrow, and the same as a dollar five years from now, then, if there's no default risk, you can pay me back the same dollar I gave you, without interest. Zero interest rates.
In a world where everything changes rapidly and I might need money now, I'm going to demand a lot of interest before I'll lend you my cash. Because I'm incurring a lot of opportunity cost by parting with it.
If this were a reinforcement learning problem, we might specify a discount factor. If that discount factor were near one, then we'd have a long time horizon. If it were closer to zero, then we'd have a short time horizon.
I'd think that low interest rates would go together with a static, unchanging environment, in which money has very little time-value.
I do agree, however, with your earlier sentence:
> As the world became more stable over time, the default risk also lessened over time
> In a world where everything changes rapidly and I might need money now, I'm going to demand a lot of interest before I'll lend you my cash. Because I'm incurring a lot of opportunity cost by parting with it.
My logic is that the market participants have the expectation that everything changes rapidly for the better; that is, advances in technology have a deflationary effect and therefore people are happy to lend at a lower interest rate, expecting the same number of dollars to buy more later.
> The answer to that more likely has to do with some very broad phenomenon: capital has been accumulating due to increases in energy availability. Human talent (that turns capital into something actual) is plateauing due to slowing of population growth.
> As the world became more stable over time, the default risk also lessened over time
I think these are both saying the same thing from two sides - the default risk going down doesn't really mean anything in isolation. The implied context is the default risk goes down for the same rate of return (or the rate of return goes up for the same default risk).
Hang on... This sub-thread is venturing into the territory of lumping airlines with "solutions in search of a problem" and that just doesn't make any sense to me.
You can argue that airlines have not returned on the capital (it may be true, I have no idea) but there's clearly demand and utility for the product, as evidenced by nearly every flight being nearly or completely full at all times.
Airlines vs Silicon Valley are actually a good example of how the sort of business that is massively threatened by higher interest rates is often an actual real business solving real people's problems that just happens to be capital intensive, low margin and fairly predictable, not the solution in terms of a problem where the return on investment is claims of high margins and pure optimism.
High interest rates won't stop VCs looking for 20-40x returns under high uncertainty falling for a pitch about how everyone will use this dumb website in future, honest. (It might reduce the amount LPs put in and get out of VC as a sector, but there's no reason to believe this improves VCs' judgement)
But high interest rates are a major problem for an airline that has a few billion dollars of aircraft to finance, and lots of passengers but at low single digit profit margins.
If they're not minimally profitable in some general sense, such that the benefits of building and maintaining them are not at least paid by the benefit of using them then no, they shouldn't be built. Unfortunately, when you factor in the externalities of carbon emissions, loss of habitat, and other biosphere stressors (the biosphere being the life support system for all life, including humans, and which we do not have the means to replace), then most human activity in living memory cannot pay for itself. This is sad, but we can't fix it until we acknowledge it.
We're using up our life support system when we build a highway or airliner, not investing in anything.
If it's privately ran it needs to be profitable otherwise it will no longer be ran (at some point). Of course the privately ran business could change course at some time and become profitable (i.e. raise prices or discontinue unprofitable business lines / areas of service). But if that's the only X store left in town and they discontinue service, you're kinda screwed.
The same ends up being true for publicly ran things as well. Flint is a great example of a town that was not profitable and so Michigan stepped in and changed their water supply to decrease the towns cost (a scenario that would've been avoided if Flint wasn't broke, amongst other ways it could've been avoided). It's just that at the government level you can have many services that cost more than they take in (often because you just don't charge people for the service; which is fine) which get balanced out (eventually) by other "services" (often more general taxes) that take in more money than they cost.
If you live in a town and continuously it spends $X a year and takes in $<X a year, that difference is going to eventually cause a problem. Perhaps it means that roads will stop being repaired. Perhaps it means you'll have boil water notices all the time.
Guess all that drinking water we have is just a waste then.
Highways too.
Airlines are unique in that they're essentially a public good that we've allowed to be a private market (look at how often the government intervenes in the industry).
Absolutely. The entire building-airplanes-and-flying-them "industry" is a side effect of their necessity as weapons of war and toys for rich people (same thing, really). There is no rational reason for it to exist, especially knowing what we know now, but we're not a rational species.
Profits seem to be sporadic. Some may be doing well right now because of unusual conditions but when competition returns and things get back to normal profits might disappear.
Have those random business ideas grown to anything like billion-dollar companies (adjusted for inflation) before everyone realized that oops, actually these things won't turn a profit? It's a fair argument to make that low interest rates (with can be thought of as a proxy for 'too much money chasing too few opportunities') take random ideas and inject them with far too much money.
(Airline industry is a special case, eventual "failure" is part of the business plan, so leave those aside.)
> (Airline industry is a special case, eventual "failure" is part of the business plan, so leave those aside.)
You could make this statement about today's "unicorns" too, once you start excluding things. If you're cynical, be cynical equally. WeWork? Classic "greater fool" "let it fail after we cash out" company. Many others out there too. Crypto? 10000%. I'm sure there will be a bunch of "obvious failure in retrospect" companies in a large-language-model wave too.
I'm not sure why airlines should be excluded. They were the "growth at all costs, we'll make it up on volume" business of the 70s and 80s. More capital invested than ever returned over 40 years.
Other businesses like this: franchise restaurants (many, many failed), motels, car rentals (you can see the gold rush in supporting the new tourist economy back then).
Counterpoint: The entire crypto market, which topped over $3 trillion in value at one point.
Even as someone who believes in crypto, some of the stuff being built is beyond stupid, and could only be built at a time when no real work needs to be done.
Like I understand Ethereum. I also understand basic DeFi projects building on top of Ethereum - Maker, Uniswap, AAVE, Compound, etc.
But once you start going a few layer deeper, you realize the sheer excess and waste. Like a project that allows you to wrap your leveraged positions in AAVE and deposit them into a dual-token vault and earn yield if one of the two tokens goes up or if there are liquidations in your AAVE or...
It's mind boggling that people thought spending their resources creating virtualization upon virtualization upon virtualization...
Somehow, I can't imagine something like this happening if you were paying 10% interest on your mortgage.
The case for decrease of human talent(however you quantify that kind of metric, if it is even true) likely has little to do with population growth, and rather the quality of education that can be provided to a broad population.
Or to the reduced incentives available to most of the population. The very rich are accumulating more and even the upper middle class are struggling, and it might take decades of work to build up enough capital to start a small business, while someone with the right connections and half the talent is handed money for little effort.
> it might take decades of work to build up enough capital to start a small business, while someone with the right connections and half the talent is handed money for little effort
You can't have it both ways; either it takes decades or it's handed over for little effort.
You also don't need much capital to start a few small businesses. Obviously it depends on what you want to do. but it won't take decades to start a dog walking business, for instance.
All business requires working with other people, and other people have money. I started selling hair products in tandem with some guy I met at a men's shed when I was unemployed. The "right connections" isn't limited to your notion of "upper class" whatever that might be.
You can have it both ways if it's different people. The amount I save over 10 years is going to be radically different than the amount of money someone pulling a mil per year is going to save is going to be radically different than the amount of money someone working minimum wage will be able to save.
Right, but we're saying "enough to start a small business" which is similarly varied.
Is it upsetting that someone on minimum wage won't be about to become a tycoon overnight? Is it upsetting that people have to talk to others to convince them to give you money?
Based on my experience working for many startups, I would say talent is not plateauing, but the capital is being managed and deployed by shockingly incompetent people. Far less competent than the people who end up working for them.
Pet rocks were actually quite profitable, the creator made a few million dollars if I recall correctly. Contrast that to unprofitable ventures today, like food delivery companies or Twitter.
Also people don't seem to understand that an optimal growth path had high interest rates in the beginning and low interest rates in the end.
If you have a constant interest rate aka exponential growth that actually means you are growing too slowly in the beginning and too quickly in the end.
Even if you subscribe to the classical time preference theory it doesn't make sense for the market to signal that you need to save more today and then signal once the future arrives that you need to save more. If the interest rate were stuck at a positive 3% this would imply that people will perpetually ignore the present and therefore some of the savings will never be spent ever. I.e. aggregate demand will be below aggregate supply.
So no, zero percent interest is not some abberation, it is simply the result of low inflation rates and high rates of capital formation and the lowering of capital intensity due to software companies.
I think it’s just the modern fiscal policy adopted by the FED. They’ve learned to tame inflation and are more concerned with deflation. Not to mention the FED is controlled by politicians who are elected by the media who is owned by the wealthy who own stocks and want them going up.
Consider also social and political stability. The variability of interest rates in function of societal cohesion was already observed hundreds of years ago, and seems consistent across timescales and geographies.
I thought the reason interest rates have been so low for the last ~30 years is because governments in the 90s (certainly the US and UK ones) took the decision to make it their monetary policy to keep them low.
One theory for why we seem to structurally “need” low rates now is due to the “tendency of profit to fall” the natural interest rate - what it would be without the fed - has also fallen. Over the long run the Fed gravitates towards the natural rate because it creates the most stable business environment.
The major structural phenomenon which prevents the tendency for profit to fall is technological innovation which creates disruption and temporary periods of higher profits due to things becoming more efficient. However, now that technological progress is quite far along, a lot of employment is in service fields which naturally cannot be made much more efficient (eg teaching, being a nurse).
I don’t entirely buy into all the Marx concepts but I do think the tendency for profit to fall is an inevitability in a stable, functioning free market as efficiency and competition drive down margins. This causes ROIC to lower
> [...] products that ultimately turned out to be dead ends, like the Palm Pilot [...]
Huh? I never had a Pilot, but from everything I've read about it (and how people who did have one describe it) it was quite amazing, and arguably the predecessor of the smartphone, no?
I get that the product line is dead, but the concept was very much viable...
I had several Palm devices. As I recall there was a fairly long gap between the death of PDAs and the birth of smartphones. I certainly did not replace my Palm with a smartphone; I replaced it with nothing, and then years later I got a smartphone. Most of the things that are amazing about smartphones were not present on my Palm IIIe, FWIW.
> there was a fairly long gap between the death of PDAs and the birth of smartphones.
Only if you define the birth of smartphones as starting with Android/iPhone. Palm released their own smartphones using the same OS as their PDAs (the Treo line) prior to that, and Microsoft had Windows Mobile plus a bundle of third-party manufacturers. Plus Blackberry had been around the whole time, too.
Looking it up, it seems that Palm Tungsten TX[1] was produced in 2005, 1.5-2 years after they started producing the Treo 600[2], which was one of the first smartphones - yes, it was inferior to the iPhone in a number of ways, but having owned a Treo 680, in my mind it still qualifies as a smartphone.
This. For me it started with the XDA (II). The telecom provider O2 had an HTC produced handset called the XDA, essentially a Pocket PC (predecessor of Windows Mobile) PDA with built-in GPRS modem (which I remember fetching up to 64 kbps, as opposed to using dial-up via GSM, which would get you 9600 bps if you paired up a Palm or psion 3/5 via irda to a nokia 6210). The XDA II followed a year later. By that time, there were also multiple Treo models with built-in mobile modems.
It was great. There was no app store, but there were dozens if not hundreds of apps voor PPC on Tucows and other such download sites. But, people would laugh at you 'why would you want to browse websites or check your e-mail when you're not at a computer?'
I’d put the starting point at the iPhone, but not for technical reasons and with a heavy American focus.
At the turn of the century I had a PDA with unlimited wireless data (Handspring Prism + Ricochet). I used that a lot for email and web browsing but stopped when those companies failed.
There continued to be PDAs on the market but the chokepoint as needing $100/month or more for an unlimited data plan. This especially toxic for the web where you have no idea how much data the link you are thinking about clicking on will use. Also, the phone carriers charged App Store fees which would’ve made Steve Jobs blush and had to be individually negotiated with every phone company so few developers even worked on apps seriously since the market was so limited.
The iPhone was a huge improvement in the device but equally big for Americans was the cheap unlimited data plan meaning you weren’t having to think about the cost before sharing photos or sending an email with an attachment.
Even before that was a Kyocera but that was really nothing like an iphone and not that great to use. It was probably first or close to it, but took a couple other iterations to get good.
That Samsung was awesome though. I loved that thing even though I did and still do miss having a real keyboard, so that was actually not an aspect I loved, but it sure was slick and the universe of apps provided any funky functionality I wanted, because the apps could actually integrate with the phone and hardware. For instance out of the box the dialer was not that well integrated with anything else like the address book. But a guy sold an app that did that awesomely. That phone with that app installed pulled things together into the next level usefulness that we all take for granted as obvious now.
> It’s been a frustrating year for us Sidekick users. It seems like every television show, periodical, and man in the street is raving about the amazing world-changing capabilities of the iPhone (and, to a lesser extent, the Google Phone). How having a device that can conveniently surf the Web, answer email, run third-party applications and fit in your pocket is as big a technological breakthrough as hovercars.
> Which is infuriating to those of us who have been using a superior device for the past five years.
I disagree here- The Palm Treo was arguably the first smart phone, limited as it may have been. I had a 650 from around 2005 or so, and I actually kept that thing going until 2009 when I got an IPhone 3GS. The Treos and "regular" PDAs all ran the same PalmOS software. The Palm 600 was the first real smartphone and was released in 2003.
I didn't pay for data, so used the PDA features much like you would a regular PDA- I had a dock and did a sync to my computer via their software. But I could and did put ebooks, mp3s on the device, synced my calendar, etc... it did the job, just much more poorly.
You also had "Pocket PCs" made mostly by HP that were kicking around during this period as well. Ipaq's were only discontinued around 2011, the last model apparently being released in 2009: https://en.wikipedia.org/wiki/IPAQ
The Palm Treo and Pre filled in the gap between PDAs and smartphones. And of course there was the Blackberry from RIM, whose first true smartphone products (the 850 and 857) were released in 2002.
Keep in mind that the iPhone somewhat evolved from the iPod with the iPod Touch being effectively a WiFi-only iPhone. Largely what we'd call and iPad today, though the iPod Touch was produced through 2019 per Wikipedia.
There was also the Ericcson P900, a smartphone also released in 2002:
Are you sure? You might have replaced it with a smaller, lighter, more-powerful laptop that you could more easily use on the train or a flight, and a Blackberry phone that had a lot of Palm features built into it (minus the screen and stylus of course).
Most of the things that were amazing about the iphone I had in my Samsung sph-i300 palmos phone 6 years earlier.
In many ways the palm device was more amazing since it was already a rich mature ecosystem by then and already had 3rd party apps, thousands of them, for every imaginable purpose.
It was the essense of the later iphone (after it allowed 3rd party apps) 6 years before the first iphone.
I don't remember any gap. I certainly had an unbroken sequence of pda phones from several makers after that, but maybe there was a time before 2001 where people didn't use pdas much?
I never used straight non-phone pdas myself.
I was playing with a wince pda for a while but only for stunts like getting an old dos version of my companies unix software to run in a dos emulator on a Journada, just to show it at a company xmas dinner to the guy who invented & wrote the language and db initially on the trs80 (he immediately closed that and tried to find porn, I love that guy).
To me a pda was never that useful by itself, only when Kyocera combined it with a phone a year or two before that i300 did it become a must have for me.
But the way I remember it they seemed to be pretty popular with everyone else.
I had all kinds of Palm devices, but the only Blackberry I ever had was supplied by a company (around 2006) - I don't recall them being consumer devices in the UK until after the iPhone.
I went from a Palm PDAs (m105, Handspring Visor) to the Treo 650 as my first smart phone personally. And for years before the Treo, I was using some sort of cable tether to my phone to provide internet access to the PDAs. It was pretty cool.
I still miss Palm WebOS and the potential of the Pre/Pixi line.
I used them for years, even delayed finally getting an Android because I liked my Treo so much (the Treo is a reminder that Palm combined the PIM with a phone long before Apple or Google did)
Well the phone part is pushing it a bit here.
I grew up after it but someone gave me one to hack around with as a teenager and iirc it had a mail client but to connect it to the internet you needed a cabled modem so you could only use these features when you were pretty much already at your PC anyways. The local file-transfer feature was cool tho, but again this required your counter-party to also have a palm.
I had a Treo 600 and (more importantly) a Treo 650, which were direct descendants of the Pilot. In the years before the iPhone it meant I could read email etc on the way into the office - it was pretty great. Of course, the iPhone was a substantial leap forward, and Palm's unwillingness to realize that such a thing was even possible - combined with godawful native development tools - made it a victim pretty early on.
Palm Pilot was a huge success both from a sales perspective and from "getting consumers comfortable with touch screen" perspective. The author of the article has a very poor choice of metaphors and examples which really obscures his point.
Palm PDAs were instrumental in getting me into the tech field.
At the time, the way they could enhance my life felt magical, and they were down-to-business and solution-oriented in a way that I miss in modern smartphones.
I think the point being made here is that when a solution has found its problem, exploitation of that solution drives up rates, because rolling out the solution is an ‘easy money’ investment. Seems reasonable. I can buy that connection. The motor vehicle example makes sense.
Of course you then have to hold that theory up to other cases and see if it holds. Like: where was the high rate era that followed from the invention of the internet? Rates have been falling more or less constantly since the mid nineties.
And I’m not sure that it logically follows that we will only find solutions in search of a problem during low rates eras, or that high rates only happen during times when a solution to a problem is in the exploitation phase.
So.. what’s the predictive value of this connection?
Solutions in search of a problem (SISP) are not necessarily tied to low interest rates.
What might be tied to them is that companies with such solutions live longer because money is cheap. However, if you never make money, noone will give you money either.
I think SISPs are a typical problem for tech-savy founders who think some kind of solution is really cool, because it solves them a problem. The problem however was never real. Engineers just tend to automate things that they have to do once a year and takes them about 1h. Automating it, is just more fun than actually doing it.
Even worse with university spin off. They almost always start with a technology that solves problem thought of in research proposals.
> takes them about 1h. Automating it, is just more fun than actually
doing it.
Spot on. The joy of technological skill, being a programmer and
engineer is that you can customise, reconfigure and shape the world in
front of you. Other people see you playing and having fun, and say;
"Hey, can you do that for me?" What was just scratching an itch
becomes something others want to universalise. And that doesn't always
work.
> almost always start with a technology that solves problem thought of
> in research proposals.
Such proposals are often desperately scraping the barrel for ideas.
Anything that combines grant-worthy buzzwords in a barely coherent way
is fit for the game.
> The problem however was never real.
The tragedy is that the problems become real. Otherwise intelligent
people see a bunch of PhDs frobicating widgets, and a bunch of wealthy
investors throwing money at them. They read the self-affirming press
reports on the research and the marketing hype about how Widgifrob PLC
are the hottest new thing. Suddenly everyone has a widget that needs
frobnicating.
Low interest + easy capital + bloated academic research machine = new
problems. It's a problem creation machine.
Research proposals are not supposed to necessarily solve current real-life problems so there is nothing inherently wrong with that.
But given the amount of startups coming out of universities, the mindset is crazily wrong. So many people coming with a technology. If it's software you can at least pivot easily but if you got some kind of hardware technology, it becomes much less simple to do that.
> Low interest + easy capital + bloated academic research machine = new problems. It's a problem creation machine.
Not sure if I understand you correctly, but academy seems to be more of a solution creation machine without real problem solving. Problem solving as in someone will pay to get rid of the problem because it happens frequently and costs a lot of money each time.
It is hopefully not an obtuse point but allow me to explain it with a
story;
Teenage girl has a beauty spot. Her parents tell her it's a princess
spot. Boys think its cute. She's happy. Some mean bitches tell her
it's ugly and probably skin cancer. Now it's a problem. Nothing in
reality had changed of course. And that's how solutions looking for
problems go about the world creating new problems. It's in their
interest to.
I thought this article had a good rule on how to differentiate dead end "solution in search of a problem" inventions and ones that might be successful.
> whether the technology does something that would be useful if everyone had it, but is relatively useless at small scale
I've often told my partner a lot of his "smart home" devices are solutions in search of problems. It seems to ride this line. Probably why despite my protests we keep winding up with more and I have to yell at alexa more frequently
My smart home gadgets are a common source of controversy in my house.
I have some rooms with dimmable lights that work really well even if there is some latency. I have other ones where there are chronic reliability problems usually because I tried to get a Sengled switch to work a Hue light or something like that.
I’d say my project success rate has been about 50%.
Hue made a really great switch which is piezoelectric powered and doesn’t need a battery but these are now crazy expensive and hard to find. I think switches are affected by supply chain issues but might not be stocked at places like Best Guy because plenty of people seem to have a smartphone grafted to them and just use the phone as a switch.
I like smart homes in principle, but the current implementations are awful. I end up sitting in the dark because software on my lightbulbs locks up, and a robot tells me "Sorry, I can't find 'lights on dammit' in your music library".
I think it's a false dichotomy. Supposedly the GP thinks that their smart home devices are already useful, so there is no need to consider whether they would be more useful if more people had them. I think the quote from the article is a bit strange, and the example of clocks is not very good because people still had a way to tell time before clocks were invented (e.g. looking at the sun), it was just not very precise. A clock is still useful for a single person because that person now has a faster and more reliable way of telling the time without having to look out the window.
I think the point of the analogy is that a clock isn't very useful for an individual, unless enough other people around you also have one. You don't gain much from being able to accurately tell the time down to minutes or seconds, because by far the biggest non-specialist use of clocks is synchronizing with other people. You'll come by the store at 08:00 sharp, and discover it's closed, because the day is cloudy and the storeowner's rooster overslept, so he still thinks it's early.
Such fundamental technologies have also a perverse tipping point, a kind of strong network effect in disguise. Continuing with the analogy, once enough people have clocks and start coordinating with them, they'll start forcing their preference on others, and soon enough everyone has to get a clock, or else they won't be able to synchronize with the society around them.
With timekeeping, this arguably happened before most of us were alive. But a more recent example, one that's being regularly lamented in bars and in press, is cellphones (and even more recently, smartphones): they went from a rich people's toy to being ubiquitous in ~decade, and these days there's a strong social expectation that you own one, and that through it, you're accessible during waking hours. People slightly older than I am call it an invisible chain/tether. Our children will probably call it "normal", just like my generation considers clocks normal.
Yes, but it's not as useful as it is to a modern person, because if you're the only person who owns a clock then your life will have very few situations where knowing the time exactly and reliably matters -- so you only own one if you have some specific use-case where you care about exact time. The benefit of owning a precise and accurate clock becomes much greater if you are frequently interacting with other people who also have precise and accurate clocks (such as operators of railways), and at the point where most people in a society have an accurate clock then it becomes a default assumption that scheduling can be done by time and you will find it increasingly difficult to be without one. (I think the smartphone is currently going through a similar transition -- right now it is definitely still possible to live without a smartphone, but an increasing number of organizations are now starting to act on the assumption that every person they deal with does have one.)
I think there's a lot to be said about smart home devices and accessibility. I could imagine voice assistants controlling devices for those with vision impairments or mobility impairments would be a huge boon.
I love smart home stuff, but greatly prefer open source compatible (Home Assistant etc), non-internet-connected smart home equipment that still has hardware switches. There's no good standard for RGBW addressability over wires here in the U.S. (that I'm aware of) so I do use some Philips Hue bulbs, but only accompanied by a hard-wired switch capable of associating directly with the bulb, so that all it needs to work is power.
I will admit though that I still mostly just do it because it's fun. But hey, it's fun that comes in handy, too.
Yeah if someone came out with a piece of hardware that could run the an NLP model to detect the common phrases (turn lights on/off, play music, etc.) and then have it prepackaged with home assistant it would ruin a lot of these cloud connected devices.
System like X10 or power line Ethernet that communicate over power lines have huge transformers and I think high power consumption. You’d think you could have power line Ethernet in your PC or X10 bulbs but it is not so practical.
Yeah, powerline data transmission seems impractical. It works, but reliability has always been a huge problem for me, even with the most expensive adapters. Now that I own instead of rent, I just run ethernet for my computers. For smart home, I don't really care for throwing RF at every single problem, but ZigBee and Zwave at least do work, so I am just doing that for now.
What would be cool is just having something simple, like maybe one or two wire serial, at least between the switches and bulbs. Today, the best solution I'm aware of for smart bulbs is something like Inovelli Blue Series or Embrighten switches, which can associate with the bulbs directly. Even though in smart bulb it must use RF, it can at least skip the hub and work when everything else is down.
(Though, I am a little disappointed that I had to bypass the power control for my Blue Series. I was hoping I could have it connected to measure power usage even in smart bulb mode, but it seems even in smart bulb mode where the power is passthru you still can't have an inductive load like a ceiling fan motor or it will cause problems. Bummer.)
I'm baffled at what purpose there is to voice-activated lights.
Light switches are always at the entrance to a room. If I'm entering or exiting a room, I turn the light on or off as I pass the switch. This is going to be much faster than "Alexa, turn the computer room lights off" on my way out and then waiting to make sure it understood me.
The only exception is my front porch light. I usually leave it off, but turn it on when I'm expecting a food delivery at night. Being able to turn it on from my computer room remotely could be nice, but I'm not going to begin investing into a "smart home" for that one purpose.
My TV and clothes washer are both "smart", but I don't use any of the smart features, and neither have ever been connected to my WiFi.
The only smart appliance I have is a thermostat, and even that one is pretty basic. It has an app that I can use to control it and create a schedule, but it doesn't try to learn when people are home.
I think a lot of this comes back to the way everyone has been focused on building huge mainstream businesses for a long time. Many IoT devices are useful to many people but not at the scale companies like Amazon or Google want — people with vision or mobility impairments, for example, find voice control far more useful than other people but that isn’t a huge market and many of them are low income. Parents with babies probably use voice controls more than they used to but that only lasts so long and then becomes a problem until they protect the ability to have Alexa order more LEGO sets - and not anything people are jumping to subscribe to.
There could probably be a medium-sized business model which works but not the kind of hyper-scale vision that SV has favored. Apple seems to have the best balance putting the smarts in devices you were already buying for other reasons, and being able to concentrate more than one promotion cycle out which Google struggles with.
> Light switches are always at the entrance to a room.
Not necessarily. Open layouts have taken the office and residential markets by storm over the last two decades. Many "rooms" don't have well-defined boundaries, so it's common not to have a switch everywhere someone might enter.
I know interest rates have a strong effect on tech stocks but my understanding is that they have their biggest impact on boring but capital intensive businesses such as cars and buildings.
For instance Facebook was said to spend $10 billion on the "metaverse" last year but spending on building construction was about $1.5 trillion
Homes and cars are simply out of control. People are getting mortgage sized loans just to buy a family car. Something which will become worthless over 10 years of use. Getting a mortgage on a home is now a non-starter for a huge swath of the population. I suppose I can somewhat understand the price of homes going up. It's a durable item that, if reasonably maintained, has an unlimited useful life. A car on the other hand, no matter how well maintained, will become worthless in a decade. Freewheeling monetary policy does not just impact which cars a person is able to buy. It more insidiously impacts that cars which manufacturers choose to design and build. Even entry level cars are packed with features and electronics and carry a near $30k price tag. It's not going to be so easy for the industry to get back to building simple and cheap cars.
One thing that could be in play is mortgage originators often sell loans to other investors post-origination. I am talking about Fanny Mae and Freddy Mac and others, who hold a ton of homeowner debt on their books.
460 million of loans is about 1000 average-sized mortgages at issuance - if your CU's entire business was 1000 loans they'd probably not bother with it since the staff and infrastructure to do it is such a pain in the ass. Chances are this represents some unknown percentage of total issuance that just happened to not have been sold.
A $30k car would be something basic like a corolla or civic. When you start talking about larger family cars, $50k is really the low end of what you find on dealer lots. Bear in mind, the MSRP of a vehicle and what you can actually find to buy is quite different. And $50k is a common entry point. Prices escalate quickly from there. My point being that you used to be able to buy a new car such as a civic or corolla for closer to $10k than $30k. I bought a brand new Mazda 3 for $13k in 2006. And there were tons of them on the dealer lot and they worked with me on the price. Nowadays if you head down to the Mazda dealer you might be lucky to find one just under $30k.
It's actually difficult to get mortgages for that small an amount. There were lots of properties here (MI) in that price range post 2008 and my dad ended up buying a house with a credit card because it was easier than trying to get a mortgage for that amount.
Depending on your selection of ‘people’ it isn’t that odd - anyone financing a Tesla Model X for instance, is looking at $120k+ prices, and there are a LOT of them in many parts of the Bay Area.
To be fair, I don't think the people dropping $120k on a car are also in the market for $120k houses.
Now, trucks... I've seen some houses where the truck parked out front may well have rivaled the cost of the house. Of course rural-American housing in boring areas (no skiing or nice views or anything to draw tourists or vacation-homers) still being very cheap contributes to that kind of situation.
> A car on the other hand, no matter how well maintained, will become worthless in a decade.
Uhm ... my 24yo Volvo disagrees.
The resale price of 120k+ mile cars is silly low compared to the value you get from using them. Don't tell anyone though. I want this market for my self.
I guess the retort is that even when such projects fail, they leave behind something material that can be repurposed.
If your manufacturing plant fails, the warehouse, factory, machinery, etc. are all reusable and last a long time. Heck, so much of the housing in major cities is built out of old factories.
If your startup selling virtual pet food for your digital hamster fails, what does it leave behind?
I am wondering how much of the excessive (even to the point of lunacy) funding of stupid ideas in tech is due to a low-rate macro environment as opposed to a spray-and-pray gold rush that naturally gets triggered whenever someone hits gold in an area.
After all it is hard to argue that AdSense, iPhones and AWS are not hugely profitable paradigm-shift innovations that would thrive in even the harshest macro environments, and the excessive mad funding are just ill-informed speculators trying their best to win the power law game as often happen in gold rushes.
I will be interested to see how much of a hit AWWS/Azure/GCP takes during this downturn. Suddenly startups are not going to be spending millions per year on cloud stuff stuff that they don't really need (ex: massive redshift cluster for your "data collection"). Furthermore, a large number of startups will cease to exist.
I would guess large customers have account for a massive portion of cloud revenue; however, they also get much better pricing due to their scale. I would guess that the startups have to be where the gravy is since you are not getting a massive discount when you are small.
I would be very surprised how much of start-ups spending is driving AWS adoption (it's probably less than 5-10% of their revenue). In the UK alone a huge chunk of the public sector and FTSE100 corporate sector has migrated to AWS and Azure to the point where they are national security risk.
In a sense AWS/Azure/GCP are doing startup investing, giving out tens of thousands of credits to basically any startup that asks for them, in the hope that most of them stay on their platform and some of those become huge (=big spenders).
So if less startups are founded, startups fail earlier and startups build less-oversized architectures we might first see the effect in the beginning of the funnel, in terms of less free credits being spent. The hit to revenue would then take a couple years to fully materialize.
The thing is too... the spray and pray approach does work. The success of VCs is based very much on spray and pray at the end of the day.
The other thing people are forgetting is that many "unicorns" that are unprofitable do have a road to profitability. But the investor sentiment over the last 5-10 years has been to push companies to grow vs. try to become profitable fast at a smaller scale.
At the end of the day, one reason I suspect tech won't retreat in dominance is that the rate of return on capital is extremely high even when you factor in top end compensation for employees.
The change I do predict is that we'll return quickly to a "grow fast, fail fast" world where investors will be less willing to ride out investments that don't have a clear path to monetization in the future. Monetization will likely be emphasized from the get-go for founders. It won't be an after thought. In the past few years, some ridiculously dumb ideas were getting $5-10mm investments shortly after seed stage. I suspect that era is done for a while.
Low rates throw fuel on the fire by reducing the return on other viable options, and if in the presence of other asset inflation, helping to drive desperation for ‘positive’ returns.
If the safe option goes from ‘T-bills that don’t lose you money’ to ‘T-bills that defacto lose you 3-5% a year relative to price inflation in every asset you care about’, risk appetite increases.
Think of it like an investing Overton window.
They didn’t start the fire, but boy did they make it quite the bonfire.
Surely Real Rates are the issue? Ie now when inflation is 7%+ and rates are 4%, rates are effectively lower than when inflation is 2% and rates are 1%. I'm not buying lots of these analyses.
For what it's worth, since people make borrowing and lending decisions taking into account what they think inflation will be over the course of the loan, usually inflation predictions over the next however-many years are used to compute the effective real rate of interest, not the current rate of inflation.
Above the fold, self promotion... below the fold, a popup to sign up without reading it. I can't be bothered to click out. I can be bothered however to write this comment to complain to the state of the SEOfication of all content. Maybe it's good, but I'm immediately skeptical.
As far back as the 70s (when interest rates were 8-15%), there have been random business ideas being started and shutdown (pet rocks, every airline ever, etc.).
We don't remember those because they shutdown 40 years ago. Today, we only see the successful ones that survived (walmart, fedex, etc.).
There's a legit question: why have long term interests declined over the past 500 years, accelerating in the past 50-100 years.
The answer to that more likely has to do with some very broad phenomenon: capital has been accumulating due to increases in energy availability. Human talent (that turns capital into something actual) is plateauing due to slowing of population growth.
Testable Prediction: we will have <1% fed interest rates again at some point before 2030, because the long term trend remains downward for now.