this post was submitted on 07 Jul 2023
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High inflation is far worse for most workers than higher interest rates.
Say that to the people who will eventual default on their mortgages and lose their homes. Economics is the only social science that behaves as if it were a natural science where everything is self-evident. That's not to say that low interest rate are inherently good but that the mechanism itself that is used to combat any form of inflation is a very limited tool.
Houses got stupid expensive because interest rates were too low. People bought houses uses cheap debt without considering the possibility that interest rates would go up, and bought houses they couldn't afford. Interest rates never should have been so low in the first place.
Many people bought homes they could afford, that they needed to live in, after passing a very conservative stress test because that was the way you are supposed to buy a home. Nobody expected the interest rates to more than double in a couple of years. Itβs unprecedented. Nobody expected our government to do absolutely nothing about inflation and leave it all to the BoC to fix. You are vilifying and generalizing an entire class of people, most of whom do not fall under the cherry picked description you offered.
Repeat after me: most homeowners are regular people who borrowed responsibly under stringent criteria when they bought their homes.