The Fed fires up funding bubbles by encouraging risk. It pushes capital out of low risk paper and into high risk speculation (startups, stocks, whatever).
It's why we saw incredible funding bubbles in the late 1990s, the mid 2000's, and just recently, all timed very well to the Fed encouraging risk booms through artificially low rates and other similar manipulation.
Understanding how the system functions, helps you understand the funding environment, which benefits anybody trying to work on a startup that has to concern themselves with financing. It's not ideal to overly focus on this of course, but it matters.
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The Fed fires up funding bubbles by encouraging risk. It pushes capital out of low risk paper and into high risk speculation (startups, stocks, whatever).
It's why we saw incredible funding bubbles in the late 1990s, the mid 2000's, and just recently, all timed very well to the Fed encouraging risk booms through artificially low rates and other similar manipulation.
Understanding how the system functions, helps you understand the funding environment, which benefits anybody trying to work on a startup that has to concern themselves with financing. It's not ideal to overly focus on this of course, but it matters.
No, govt paper is low risk because there is simply a very, very high demand for it. No one is forced to do anything with their capital.