Debunking Economics - the podcast cover image

Rate rises and inequality

Debunking Economics - the podcast

CHAPTER

The Dangers of Too Much Private Debt

The fixed 30-year mortgage in the US is already around 7% compared to 4% just before the pandemic. Americans could be seeing the highest mortgage rates this century with highest prices way higher than they have been, even adjusting for inflation. We've had an incredible growth in the power of the financial sector by enabling them to increase level of private debt. So it isn't interest rates are a problem because private debt is too high. Interest rates would go low because we let private debt get too high during the bubble. And policy makers, without knowing why, were forced to reduce interest rates. Now that the only control mechanism they think they have is putting interest rates up for inflation. In

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