All of the goldbug quantity-theory-of-money folks were screaming about Greenspan holding rates artifically low for so long -- both before the tech bubble in 2001 and up until they started to delicately raise rates after 2003.
Once the real crash starts to unfold it may get bad for awhile, but once the Billionaires start getting worried about it they'll hit the monetary gas pedal again. SWEs will mostly weather the storm, and even if it gets bad enough that a lot of them lose their jobs (particularly at the margins), it'll still all come back.
Which is to stay that the Fed will definitely not stick to their guns once something significant pops.
(And your analysis kind of shows that there will be significant pain because everything has been built up around the interest rate environment that we've had post-2009 and trying to create any kind of structural change there will definitely cause a crash -- And the Fed works for the Billionaires so once they start to feel the pain then policy will reverse)
So I wonder, how did he go from "fiat schemes exist only as a means for welfare statists to infringe on property rights" to being in charge of interest rate intervention?
Permanent money is always in disequilibrium. It doesn't build up anything. It is always broken which forces constant interventions to reach equilibrium.
I was under the impression that "hard" engineering isn't as financially attractive to investors due to the long payoff period as compared to web software. In that case, won't high interest rates actually hurt "hard" engineering due to a greater discount being applied to future cashflows?
A lot of people in the comments are talking about how EE work is comparatively much harder. But that's irrelevant. SWEs simply make businesses more money.
"Software engineering" is probably subsidized by borrowed money aimed at growing locked-in userbases and therefore valuations.
According to the Friedman rule the optimal interest rate is 0%.
I can maybe see how low interest rates could maybe increase software salaries. But I can't see anyway that would depress EE salaries.
Interest rate intervention (making them lower than equilibrium) changed the DCF valuation that is the fundamental way of evaluating business (i.e. people working together on large endeavors) to one where promising massive returns in the future(20+ years) made low returns in the near term (x<20 years) acceptable. Investment dollars chased growth and VC and PE grew. Meanwhile, in order to compete for capital, all businesses focused on delivering value now had to adjust their income statements (try to grow revenue, or more likely cut expenses) as hard as possible to compete with businesses that aren't delivering on much now but seem like they will change everything in the future.
Google "DCF Valuation" and model out 100 years in excel. Add a row that divides the PV of each year by the NPV so you can see the % it contributes to the NPV. Then setup a bar chart so you can visually get a vibe for the integral of different time periods. Once that is all setup, try a real simple assumption: 0 growth for CF and .5% for your Risk Free Rate. Then try it at 5%.
If the Federal Reserve sticks to its guns and gets rates up, and keeps them there, it will be unsurprising to see "hard" engineering jobs be valuable again, while all the CSS people suddenly can't find two pennies to rub together.