Paying off loans is equivalent to saving! As long as you aren't taking on new debt to pay off the old one.

> How many people do you know who pay off loans in the middle of an inflation?

If interest rates are low, nobody. If they are high, lots. Go look at r/personalfinancecanada and there's been a huge shift from "taking out a line of credit at 2% when inflation is 6% is practically free money!" to "which should I repay first, my mortgage, my credit card, or my HELOC?"

"If they are high, lots."

And what do the aggregate numbers say, rather than the anecdotes from rich people?

If you can't afford the heating then you don't pay down loans. You take out new ones.

> And what do the aggregate numbers say, rather than the anecdotes from rich people?

You don't need me to do your research for you, but the data agrees with the theory. Canadians are paying down their at a record pace. Household debt payments rose to $57.4 billion in Q3, its highest ever.

https://www.theglobeandmail.com/business/economy/article-can...

On the flipside, household debt exploded after rates dropped to zero. I think that's very uncontroversial. So either you believe the conventional wisdom that low rates increase indebtedness and high rates decrease it, or... or you'd have to take one of these positions:

- every interest rate somehow stimulates borrowing

or

- there's one or more "goldilocks" interest rate that causes people to pay down debts but every other rate causes people to borrow.

No, because bank reserves can go up. And by increasing its interest rates, the Fed reserve is encouraging banks to put more money in reserve accounts.

Bank reserves cannot go up in aggregate unless government spends more than it taxes and doesn't issue bonds to drain those reserves.

Bank reserves are on the asset side of the bank's balance sheet. Deposits are on the liability side.