According to LessWrong, the U.S. mortgage rate of 6.5% masks a financial fiction. Author Bruce Middleton breaks down the figure: just 1.2% represents real interest; the rest is 'clawback'—lenders padding rates to offset inflation-induced debt erosion—plus government tax on that padding. If mortgages were indexed to inflation instead, the true borrowing cost would surface. Three Nobel laureates—Milton Friedman, Franco Modigliani, and Robert Shiller—have championed inflation-indexed mortgages for decades. Middleton argues this accounting quirk has artificially constrained housing affordability for over two centuries, sustained by regulatory superstition rather than economic necessity.

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