More money than anyone imagined: an explanation for why the bubble never burst
&gt; All that capital from institutional investors, sovereign wealth funds, and the like has enabled start-ups to remain private for far longer than they previously did, raising bigger and bigger rounds.<p>This misses the forest for the trees. These investors have so much money because the global economy has exploded over the past 20 years. Saudi Arabia has money to spend because it&#x27;s selling oil like crazy--oil revenues began to explode after 2000. See <a href="https:&#x2F;&#x2F;tradingeconomics.com&#x2F;saudi-arabia&#x2F;government-revenues" rel="nofollow">https:&#x2F;&#x2F;tradingeconomics.com&#x2F;saudi-arabia&#x2F;government-revenue...</a> I didn&#x27;t even <i>know</i> about Saudi Arabia&#x27;s increased revenue, but I knew I could find data like that as it&#x27;s a consequence of the monumental revolution in global wealth. It&#x27;s not just China. The economies of Africa and Latin America have exploded over the past twenty years. Similarly, since 2000 most Asian economies began following the trajectory of the so-called Asian Tigers before them.<p>I&#x27;ve posted it elsewhere, but some reports from a few years ago projected over $300 trillion (trillion!) in global assets floating around, <i>exclusive</i> of real estate and capital equipment valuations (though some of that wealth shows up as securities). That dwarfs interventions like QE that everybody loves to bring up, which even if you account for the inflationary effect still only amounts to a small fraction of global assets.<p>If you don&#x27;t appreciate the <i>fundamentals</i> for this explosion in cash then you&#x27;ll be waiting forever for the other shoe to drop. Keep in mind that the global economy has been depressed since 2008-2010. Indeed, that&#x27;s one reason there&#x27;s so much cash parked in the U.S. But when the global economy picks up there&#x27;ll be even more cash, so even if countries begin reallocating cash elsewhere, that doesn&#x27;t necessarily mean a substantial drop in absolute terms in the U.S.<p>The U.S. has a significantly diminished position in global trade, relatively speaking. We may be the biggest trading partner for most countries, but most countries are also trading globally, so being the &quot;biggest&quot; partner for each country doesn&#x27;t mean we dominate the global economy in the way we once did. Similarly, the complex global supply chain means the emphasis on bilateral accounting fails to appreciate how the underlying flows work and thus how the fundamental global economic engine operates.<p>The only &quot;bubble&quot; is in the U.S., and while we may see a correction any day now, it&#x27;s not going to be cataclysmic. Not unless we make it so.