Time travelling money, black-hole valuations and physics of increasingly (fin)tech world

The era of cheap money support all sorts of long term bets, yet something is gotta give

The deep recession as the era of 2008–2013 is now called, venerated cheap money policy, needed to cover animal spirits of ambitious professional crowd, locking billions in now stringent capital requirement levels. The imbalances stemming from 2B2F (“too big to fail”) outsized and opaque shenanigans stifled liquidity and contributed to public discourse on helicopter money and other instruments to propagate liquidity (programmable money that lose its value of hoarded anyone – oh, here go the negative interest rate!).

The negative interest rate is interesting. It motivated not just the banking sector but the corporate one to benefit:

• Pushing money from bank stocks and away from capital requirements and towards the world of arbitrage directly, hence its growing interest in DLT to let them organise an alternative transparent money market and corporate bond ledger
• Exerting pressure on fintech and big bets in general – trying to rebuild the value chain stack with new tech, request for data contextualisation and flexibility – something that existing structures shunned for long, unwilling to cede control.
• Where the internet companies proved the market right is the way to get more than 2 out of 1+1, building on shoulders of others. In the classic banking world cooperation is seldom championed – it did not go farther than supporting the basic (regulation driven) pillars. The internet is all about creating new things and see the regulation keeping up, for the bank world this does not apply.

The alternative corporate money led investment in tech world is all about multiplying the odds. From here, ecommerce or consumption led fintech is more powerful

• Still, it leaves unanswered the conundrum of whether you can approve of exorbitant and, to the eye of conventional investment and return – ludicrous valuation for some asset classes.

E.g., assign a 20 billion on a 1b revenue company in smart office rent where the major intangible in the equation is the said network effect of what the company supposedly gives past the well managed office space.

Maybe this is all about the thirst of old returns. It may be the bet on having the odds to rebuild the old fabric and allow the old to migrate to the new rails of API ready, component based architecture – meddling the world of money and commerce back together (where original banking was born, facilitating trade and commerce – means for ways and not a circular reinforcing greed circle).

Low term interest rate creates near vacuum for companies , motivating to support radical bets with long term debt fuelled investment

Morphing terminal value in a mirage, as we are currently in the desert stifled of near-term opportunities.

Rebuilding the world is a noble motive, we just need not forget of the fuel properties we ride on. Seeing how much liquidity has been put to the world and how hungry it is for meaningful projects, contraction would be painful. Don’t spray and pray. Invest smartly.

PS. Written on the move.