Thursday, August 10, 2017

Gotta love that focus on interest rates

From Bridging the Gap: Forecasting Interest Rates with Macro Trends, an FRBSF Economic Letter by Michael D. Bauer:

... interest rates affect household finances, business funding costs, government debt, and ultimately the health of the overall economy.

Yup. And everybody focuses on interest rates. But nobody worries about the size of accumulated private debt, which is the money on which interest has to be paid. Public debt, too; but if I didn't specifically say "private" you'd think I meant only the public debt. (Public debt is the least of our worries, or anyway the lesser.)

1 comment:

The Arthurian said...

Look at it this way: Almost everybody worries about the Federal debt... but there's little concern about the interest rate the Federal government pays.

And almost everybody focuses on interest rates affecting economic growth for better or worse... but hardly anyone frets about private debt.