Earlier quoted context omitted.
ZIRP made it unprofitable to chase down fraud; money was too cheap and attention too scarce. We’ve been in a tightening cycle for a while now, but many still held out hope for another drop in interest rates. Now that rates are going crazy, I suspect we’ll see a shift to much tighter vetting and ongoing monitoring.
I wonder. Did we get ZIRP because we had so many profitable ideas back in the day or were those ideas only viable because of ZIRP? Meaning roughly: these tech startups guys are regularly pumping out multi-million companies and all they need is two college dropouts with laptops and an initial investment. So if I see two college dropouts I should give them money, right?
We got ZIRP because Western governments decided to play “kick the can” after 2008, and most lowered rates as close to zero as they could get away with while engaging in quantitative easing. This created an environment where lending was very cheap, effectively “free money”. IMHO this along with the contemporaneous smartphone/internet services boom is what lead to the previous environment, where you could afford to take on many failures as long as you had a few unicorns. Now that the industry is mature and funds are tighter, this approach doesn’t make sense anymore.