Interest rates are like a dial which turns economic activity up and down.
I’ve always understood that in theory but it’s the first time I’ve actually lived through it and it’s wild.
A few years of higher rates and half of the tech industry and the people who buy tech seems to be on hold.
It makes me realise how vacuous the last decade was and how a lot of our jobs and businesses existed because of dirt cheap money. I’m glad I saved some money rather than thinking it was going to last forever!
To really drive the nail in... consider what advances have been made in software over the past 30 years. In software specifically, NOT software enabled by faster hardware.
What can we do now in software which would not have been possible in 1995, even if we were to somehow make our hardware today usable by programmers then?
When you consider that the dot com era had mortgage rates similar to or maybe even higher than now, and same with federal rates, I tend to think there's a combo of recent startups having poor/LCD ideas w/ recency effect leading to overvaluing current rates against potential growth.
If you were older, you would still consider current rates low and recent past an obscurity that couldn't last long. I can say that definitely about Europe, ie here in Switzerland interest rates used to be around 7% for quite some time and economy was doing fine, then it dropped to negative and afterwards people complained when they rose to 1-2%. 0.4% now, not complaining.
If you're that old, you probably already have a house when it was much cheaper relative to income levels. Now, a tiny shift in interests rates affects not only the general economy, but people paying back mortgages which can take a significant chunk out of your income.
Yep. When we bought our first house (mid-1990s), interest rates were over 7%.
The future is hard to know, but demographic changes are going to move a lot of money out of the stock market (because retiring boomers and soon gen-xers will want safer investments). At the same time, labor will itself become more valuable, because the same forces are going to tighten the labor market. To me that is suggestive of an environment where the rewards of startups vs. engineering jobs are weaker.
I’ve always understood that in theory but it’s the first time I’ve actually lived through it and it’s wild.
A few years of higher rates and half of the tech industry and the people who buy tech seems to be on hold.
It makes me realise how vacuous the last decade was and how a lot of our jobs and businesses existed because of dirt cheap money. I’m glad I saved some money rather than thinking it was going to last forever!