Since the Great Recession, the Fed has transformed itself into an entity more and more responsible for asset prices. This was the stated goal since 2009 as the Fed adopted a new philosophy called the "Wealth Effect." The thinking behind it was simple: growth in asset prices would translate to an increase in consumer spending and hence demand itself. It was a 'trickle down' economic philosophy an increasingly financialized economy.
This backdrop has defined our post-2009 era which stirred certain pathologies that were reflected in the greater culture and politics. It was the time when 'finance became a culture' and actual-productivity plummeted across most developed economies, especially the United States. But somehow in spite of the accumulating dysfunction across most key areas, everything kept trudging along, partly thanks to investors being satiated with record returns.
While the near-zero interest rate regime may now be ending, it is worth considering how much of the water we were all swimming in excused poor state capacity, distorted economic fundamentals, and how it even kept a lid on the dysfunction potentially blowing up in our faces. Now that we have to reckon with these realities, it may be wise to ask how many worldviews were simply products of the the cheap money regime - which is now, in a shock to many, coming to a close. Whether or not it will easily be let go, however, is another matter.
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Surprised there isn't as much discussion of the culture war implications as I expected, though I guess if the thesis of "cheap Fed money -> highly-permissive investing environment -> tech startup explosion" is true, then it automatically explains a lot of the CW and can thus be mostly left to the reader's imagination. Question then is: what will the world look like if "cheap money" goes away? Will "soft tech" like social media take a permanent hit a la China? (Relatedly: what's going on with tech stocks right now?) Will the Culture War somehow cool down in light of a new economic reality? (Confounder: the Culture War started and grew during a time where you could say the economy was also screwed up, just in a different way.) And in light of what's going on with Twitter, will it even matter whether or not investors are happy?
My unfounded, inexpert prediction: there will probably have to be an economic correction at the expensive of financialists sometime in the medium-term future (like 10 years at most). I feel like the proverbial "other shoe" has been poised to drop for years now.
The culture war will continue until a new equilibrium is reached on certain key issues, or until political representation matches 1:1ish with demographics.
It wasn't tech, it was probably the southern strategy that started it and the Obama admin/Republican legislature deadlocks that brought it to it's current state, on the political side.
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