>How do interest rates effect everyday people exactly, other than price inflation on goods and services (which is included separately in CPI)?
We artificially made interest rates low (look up open market operations). Low rates make risky ventures more financially attractive by making the DCF denominator smaller. People look to invest in growth instead of reliable revenue. That is, "bet on the future" becomes dramatically more attractive than "goods and services being made now". Additionally, it devalues wages and increases the value of financial assets. It's literally "rich get richer: the policy".
Anyone who is upset about NFTs millionares existing while EMS workers and teachers struggle, or upset about billionaires' staggering wealth inequality, or fraudulent do-nothing scam businesses like WeWork and Theranos, obviously stupid ventures like Juicero, or basically any economic upside-downness that most laypeople have recently come to blame on "capitalism" need look no further than LIRP and ZIRP. We snapped all the fingers of the invisible hand, but did it far upstream of anything that average people pay attention to. Anyone who wasn't paid in equity got fucking robbed over the last 20 years.
I don't really agree that interest should be included in CPI, but I do agree that CPI (and PCE) is an absolute joke that doesn't measure what it claims to.
We artificially made interest rates low (look up open market operations). Low rates make risky ventures more financially attractive by making the DCF denominator smaller. People look to invest in growth instead of reliable revenue. That is, "bet on the future" becomes dramatically more attractive than "goods and services being made now". Additionally, it devalues wages and increases the value of financial assets. It's literally "rich get richer: the policy".
Anyone who is upset about NFTs millionares existing while EMS workers and teachers struggle, or upset about billionaires' staggering wealth inequality, or fraudulent do-nothing scam businesses like WeWork and Theranos, obviously stupid ventures like Juicero, or basically any economic upside-downness that most laypeople have recently come to blame on "capitalism" need look no further than LIRP and ZIRP. We snapped all the fingers of the invisible hand, but did it far upstream of anything that average people pay attention to. Anyone who wasn't paid in equity got fucking robbed over the last 20 years.
I don't really agree that interest should be included in CPI, but I do agree that CPI (and PCE) is an absolute joke that doesn't measure what it claims to.