inflation is "good" for debts if your budget is otherwise balanced and your income rises apace, but if either is not the case inflation will only depress purchasing power.
historical farmer revolts were interested in higher inflation because they had land, a real asset, and sold crops, real commodities, that provided appropriate income. modern poor people generally have zero assets.
Rates are relative, looser money absolutely translates to lower rates, even for poor people. Claiming otherwise is (social) science denial.
> modern poor people generally have zero assets.
Poor and lower class people are often deeply in debt. Many poor people will even have homes with very large mortgages outstanding, and without a route to paying it down. The median black person in Boston, for instance, (not to conflate race and poverty, it is just an illustrative statistic that comes to mind) has $8 to their name. That does not mean they literally only have $8 in a wallet somewhere, but it does mean half of those people are underwater in debt. This is before you even start looking at mortgages. I'm assuming that is not unique to Boston.
That is actually very analogous to the situation we are finding ourselves in. Tighter policy would increase the real value of the payments that poor people have to make on their homes, etc.
Pay check to pay check can mean literally that. Money comes in, money goes out. There is no buffer. UDP not TCP life :D.
This hypothesis presumes that loans are priced exclusively based on cost.
However, all products and services are priced based on willingness to pay, and profit is the delta between cost of delivering it and what customers are willing to pay.
Price gouging runs rampant on credit cards because they are designed to gouge their users. The credit card adoption and payment customer experiences are extremely smooth and free from any resistance to the point where you can pretty much find yourself with a new credit card in your pocket without knowing how. However, avoiding charges and interest payments is extremely hard by design, specially when compared with debit cards. Customers cannot escape these charges, and with low income customers they syphon a relatively large portion of the little disposable income they have.
But you are right that poor assets or debts are not enough to explain how interests rates are supposed to help or hurt them. The idea is very roughly that lower interest rates unlock investment which causes them to have jobs.
The traditional first approximation is regular people live entirely off income and have no meaningful assets or debts, and rich people don't work and just have assets and debts, live off profits/dividends, or even just loans with their appreciating assets as collateral. It is "class as calculus" as I wrote more about in another comment.
Let's be honest here, this is just a neoliberal fantasy that amounts to a liberal equivalent of trickle-down:. Enrich the rich and the $ (via "jobs") will make it magically to the Lower classes.
The rates for those are still lower than they otherwise would be.
It's interesting how even as formal christianity is in decline, the moral constructs that it popularized (distaste for usury, protestant emphasis on liberty over well-being) morph into new forms.
There, you've just committed the sin of collecting 14,000% APR.
You can't compare payday loans to things like mortgage rates or bond returns. It's a market, but it's a very different niche. It's like comparing the cost of mineral water at the grocery star to the cost per gallon of your tap water.
the rate always maxes out the legislated cap. so it's not really dependent.
The best thing is:
a) UBI, just hand out a tiny bit of money to make poor people more liquid, because liquidity kills, not insolvency
b) postal banking, because even shittier than a payday loan is high fee check cashing without a pretense of debt!
Poor people hopefully at the point can save up a paychecks worth of buffer in their bank account, and don't need postal bank loans to replay payday loans.
If you asked people 20 years ago they would say compounding interest that massively exceeds inflation is evil. Nowadays people are worried about low interest being a problem because of their wholly incomplete model of economics that doesn't even address unavoidable natural monopolies like location.
The land market is inherently inefficient. That fact was papered over by high interest rates. Instead of paying the landlord huge sums, you paid the banks huge sums. Now that interest isn't going to the banks it's going to the landlord again.
The solution is obvious. Tax monopoly rights with a pigovian tax. The mythical free market in consumer goods only exists because of well written property laws. The mythical free market in land doesn't exist because the existing property laws are written extremely poorly.
We need people to be financially educated. We teach calculus in schools but very little on finance. Perhaps that's changed since I was in high school, but for me, it was non-existent.
If we want people to be more "creative" we should achieve that with firstly with more leisure team for hobbies. No faux-entrepreneurship hustle culture. No trying to "acculture the poor" with extrinsic rewards, when rich kids have the luxury of not having the intrinsic rewards beaten out of them. Let people have hobbies. Let people involve their neighbors and pool their UBIs for the bigger-scale ones. Let no one need debt to survive.
We should go "common core" on calculus. The essence to understanding economics right is stocks vs flows, and even if people never learn "this method of solving integrals, they should be able to see a graphed function, and draw it's rough derivative and integral. It's an essential skill. They should also know how to ride bikes and kinesthetically learn this stuff on hills. It is an essential toolkit of thinking, no symbols or formalism needed or wanted.
I know the mantra of our financial system that creating debt also creates opportunity, but that is certainly detached from reality if used to form a general rule. For a average Joe, debt is exclusively bad. For states? They have more possibilities. But at that point we are talking about completely different forms of debt.
...only if inflation rates are on the way up (ie. higher than expected). on the way down (ie. inflation is lower than expected), they lose out.
There is a reason most of the farmer uprisings in the early US were over wanting more inflation rather than deflationary policy that made the value of their debt payments higher.