Interesting times

Rate hikes are regressive. They take from the poor and give to the rich. Here’s why Robin Hood would be p***ed off

Economics | Explaining why rate hikes are regressive

Heavier credit card statements were an unwelcome lump of coal under the Christmas tree this season. Higher interest rates have increased credit card bills and made mortgages less affordable—a central bank gift that’s more “Fairytale of New York” than “Jingle Bells”. They’ve also increased the size of the government’s interest bill.

In America, for example, the government owes $33.9trn and now spends $3.5bn daily on interest to service that debt. That amounts to $10.45 a day per American going straight from state coffers to Treasury bondholders. While the ratcheting interest bill isn’t a fiscal problem—the American government can always pay its bills—it is a social one. Higher rates are regressive: they give to the rich and take from the poor.