4/04/2005

Higher interest rates not necessarily a bad thing

An article 30-year mortgage rates hit an 8-month high makes it sound like having high intrest rates are a bad thing. Now from the perspective of new home buyers it might just be a bad thing. But having mortgage rates rise isn’t all bad. The whole reason mortgage rates were low was to help stimulate the economy. Now that the economy is up and running we see interest rates increasing to combat inflation yah go Mr. Greenspan.

2 comments:

BOB said...

Mr. Greenspan may be trying to fight inflation with raising interest rates, but is it too much? Fighting inflation may be very good for the American economy, but it can hurt it as well. If Greenspan is trying to fight inflation too hard, he can actually hurt the economy by slowing it down. Is Greenspan overreacting to inflationary concerns? Can someone answer me?

Dr. Tufte said...

Interest rates are a price.

Everyone should be very suspicious of anyone who says that a change in a price is either good or bad. Inevitably, price changes effect some positively and some negatively depending on their current situation. Those changes just about always net out.