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Originally Posted by DementedReality
if i have LESS disposable income, i am going to need MORE income to keep up with my lifestyle.
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A major point you're missing is that if people are worried about interest rates affecting their lifestyle, then the ALREADY don't have enough money to keep up with their lifestyles. They have enough credit to keep up with their lifestyles, which is a totally different thing. A memorable quote I read somewhere:
"Being able to afford the payments does NOT mean you can afford the item."
If you increase interest rates, availability of credit decreases. Demand for consumer goods follows.