zlacker

It depends (especially with inflation), and yes.

>>CamelC+(OP)
So it's ok to have high interest rates with the hope it will cause unemployment in the hope that reduces inflation?

>>hgomer+T
Probably yeah, that's not usurious. Usurious is where you are basically using the loan to give you an excuse to repo / sell off the assets or collateral of the debtor.

>>aprilt+v1
>using the loan to give you an excuse to repo / sell off the assets or collateral of the debtor.

<cough> buy here pay here car lots <cough>.

>>hgomer+T
People cannot borrow money from the central bank.

Also, the deflationary effects of high interest rates are not because it causes unemployment, but because it reduced the rate of increase of the money supply.

Of course, lowered money is recessionary, which leads to unemployment which puts downward pressure on wages; but wages aren't the reason for inflation - the increase in monetary mass is.

>>fdfgyu+uA
Overall, I like this post. Solid reasoning.

This part I have small nitpick about:

    > Also, the deflationary effects of high interest rates are not because it causes unemployment, but because it reduced the rate of increase of the money supply.

I would prefer to say: reduced money supply has an indirect effect upon unemployment. If it costs more to borrow money, corps will expand slower (fewer new jobs), or reduce costs (labour) to increase profits.

>>fdfgyu+uA
The Bank of England quoted reason is explicitly to suppress demand: https://www.bankofengland.co.uk/explainers/how-do-higher-int...

It's hard to see how that's not synonymous with increased unemployment, particularly given the oft quoted Phillips curve and the NAIRU.

>>throwa+2M
Right.