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3 years ago, the US Federal Funds rate was 0.08%. Now, it's 4.58%.
by Centigonal 2y ago
3 years ago, the US Federal Funds rate was 0.08%. Now, it's 4.58%.
- AlexandrB 2y agoYup. I even recall, as rates started going up, people in the tech world lamenting that they hadn't gone for big enough risks given the opportunity that ZIRP was.
- marricks 2y agoBut it's not a news story if you realize there's an environmental cause, not to mention a conscious decision of the US government.
- mhog_hn 2y agoRight. Tech startups have projected cashflows relatively far into the future. Applying a discounted cash flow analysis on far out cashflows with a 0.08% versus 4.58% risk free rate leads to significantly different results. It is amazing how impactful the tuning of an interest rate by a central bank, a single float, is.
- randomdata 2y ago> It is amazing how impactful the tuning of an interest rate by a central bank, a single float, is. But not all that amazing when you remember that said tuning always happens in reaction to what is already happening. If money were free again today, it is much more likely that people would funnel it into backing products and services riding the inflationary wave, not go back to tech startups. That's explicitly why the central banks increased rates in the first place, after all – to slow down that behaviour. It is just one of an infinite number of variables, not some magical variable that stands alone. Tech's day in the sun was over either way. People were already moving on.