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Over the past 15 years or so, the Fed’s reckless “easy monetary” zero interest rate policy (ZIRP) has not only encouraged fruitless speculation in assets like stocks, cryptocurrencies, and homes.
The Fed undermined the value of “money” by encouraging the imprudent use of artificially cheap debt and discouraging the prudent use of real, earned productive capital, distorting the entire economic system, thereby creating an “everything bubble.”
But this “everything bubble” is not limited to clearly absurd examples of strictly financial anomalies, such as skyrocketing speculative assets or disastrously distorted financial situations. “Everything” really means everything.
During this historically extraordinary period, the Fed's “easy money” has “zombified” businesses, households, and institutions alike and created a massive misallocation of resources across the full range of decisions made by all free market actors, including business investment, household formation, higher education, career planning, campaign finances, and ultimately, decisions that concern our culture.
It is not surprising that while we are witnessing the biggest surge in financial markets in history, we are simultaneously experiencing the most extraordinary human excesses in the social, political and cultural spheres, as over a decade of massive misinvestment of people's time, attention and resources has materialized as a truly distorted society with ideals aligned with illusions and delusions.
The good news is that as this financial crescendo progresses, economic trends will revert to the mean and all these excesses will pass as harsh realities weigh heavily on humanity, forcing a sort of “right-sizing” of everyone and everything.
For example, Twitter's recent “rightsizing” through Elon Musk's aggressive management actions, while still in progress, may be a harbinger of things to come for software engineering and tech industry employment in general.
To say the tech sector is bloated is a gross understatement, as years of misinvestment have manifested themselves in monumental excesses – employment levels far beyond what individual projects, services, companies, and entire industries truly need for their basic survival.
This overemphasis on the value of STEM fields is the result of a combination of loose funding for higher education and the naive belief that all students should be sent into highly technical fields where prosperity is virtually guaranteed.
The problem, of course, is that while many young people may demonstrate superficial capabilities in STEM education, there is no guarantee that these fields are suited to the long-term career viability of these people.
Simply put, no matter how much we encourage education and training in technical fields, only a small percentage of the workforce will likely be able to complete a 40-year career in a highly technical field such as physics, scientific research, electrical engineering, or software engineering.
This is not to say that it is wrong to encourage technical and scientific education, but that ultimately all of our educational goals should be aligned with the basic workforce demands presented by a reality-based, competitive modern economy, not the highly speculative, “easy money” and debt-fueled era that we have all experienced.
Furthermore, recent innovations in technology project management methods (i.e. “Agile Development” – to go into detail about the pros and cons of this technology management process would take too long for this discussion) have led to a massive bloat of staff and processes, an overemphasis on the weaknesses of human “storytelling”, a lack of scrutiny of actual working hours (especially in the case of remote staff) and ultimately a lack of completed work based in true reality.
To “right-size” the tech industry, management will need to follow Musk's lead and make major changes to operations, including massive job cuts, implementing management techniques that check commitments against actual delivery, and dramatically curtailing many of the excesses that tech workers have come to expect over the past decade.
With the delusional “everything bubble” days now a distant memory, “going back to basics” will be difficult, but ultimately will be a healthy trend toward a reality-based future.