The Fed's main jobs are keeping inflation in check and lowering unemployment. They use various techniques to do this, and one of those are raising the interest rates when they think the economy is moving too fast. To talk about this really simply, if interest rates are high, people are more likely to invest or keep their money in the bank than spend it. But it's interesting to see how far the Fed's reach extends. Although it's focused on the US economy, in a weird way it's also the world's central bank. The interest rates affect everyone; when Yellen announced what the Fed was doing, it made every business section of newspapers across the world. When US interest rates are low, investors are more likely to throw their money outside of the US in developing markets like Malaysia or Brazil because the US won't give them a good rate of return. But when it's higher, they pull their money back and can wreck emerging economies.

Also, pretty much everyone trades in dollars. So when the interest rate raises and the dollar looks stronger, lots of people sell off other currencies and lowers their values. So let's say you're a shop owner in Mexico. You were importing goods by exchanging your pesos for dollars. Because the dollar was weak, you could buy more with your pesos. But suddenly the dollar is stronger and you can buy much less with it. You may have to raise prices in your store, and suddenly people can't buy staples like rice or potatoes.

It's crazy to think of this, but when you hear shit like the Fed's raising their interest rates by 0.25%, you may think, "So what?" but it literally could wreck countries. I'm certain there are those who say the world should have its own central bank instead of the Fed, which is only answerable to the US, but Jesus that would be insane.