From roughly 2009-2022, the “benchmark” target was ~0, a policy position called ZIRP (Zero Interest Rate Policy). This might have made a little sense to like, avoid a depression in the 2009 housing-originated (ha!) financial crisis, but it turned out that running the economy in this super whacky way drove asset bubbles in a bunch of stuff which is an effective wealth transfer from people without serious estates to people with them. This was very popular with the sort of people who decide stuff. There’s this other whole can of worms called “easing” (QE) that arguably made the target rate negative, also a whole other topic.
For reasons that I haven’t heard a persuasive explanation for, beginning in roughly March of 2022 the FOMC started cranking this target up (selling a ton of bonds) and is still doing it, the most recent increase in the target was 2 days ago.
This is going to slow economic activity and on paper inflation, but the effects will usually be felt first and most in what are called “growth” sectors, basically stuff where the value is perceived to be largely in the future rather than the present. With a healthy hand-wave, “software” is a “growth” sector, which is why 500k tech people can be fired in 6 months and the Wall St. Journal can still keep sort of a straight face that labor markets are strong. There is a roaring demand for gig workers who don’t get dental.
This is already too long, so if you want my personal opinion on price discovery in elite software talent markets, reply to indicate it and I’ll write a mother micro-blog :)
I will say that understanding a modicum of finance (I’m certainly no RenTech quant!) is basically a prerequisite for understanding politics, sociology, war, energy, technology, pretty much everything.
One doesn’t need a ton, but being able to give or take eyeball whether the market believes e.g. Powell is kinda table stakes.
And it’s just insane this isn’t taught broadly. I learned even just my modicum mostly by improbable random chance.