Not to knock the Seattle Times editorial board for repeating such common conventional wisdom, but, well, they're the ones who expended scarce op/ed page space to say it:

THE rise in interest rates is welcome. The current regime, in which the saver is expected to supply funds to borrowers for next to nothing, is unsustainable.

Rates this low come at the expense of lenders — and the true lenders are not the banks, which are doing fine, but their depositors, many of them retirees who had expected to live off the interest on their savings.

Sounds like the economic agenda of old people with assets.

Actually, I'd argue for quite the opposite policy. At a time when tens of millions of Americans remain chronically unemployed, when disinvestment in our public universities have left this generation's college grads crushed under $1 trillion in student loan debt, and in which millions more Americans are still struggling to save their homes from foreclosure, no, higher interest rates isn't exactly the policy I'd use my editorial page to cheer on. Not unless I wanted to sound disconnected and out of touch.

Despite the recent round of optimistic monthly unemployment numbers, our state and national economies are far from robust. Jacking up interests rates raises the costs of borrowing for everybody—businesses and consumers—and thus drags down economic growth and job creation. Not that the fate of the broader economy matters much to retirees, as long as their investment income is secure.

But higher interest rates are particularly burdensome for the young, who are borrowing money to educate themselves, to purchase homes, and to start businesses. In this context, it might be fair to view this call to raise interest rates as little more than generational warfare.

No, what our economy really needs right now is not higher interest rates but a higher inflation target.

Inflation is already well below the Federal Reserve's target of two percent, while the jobless rate remains way above the five percent level considered to be "full employment." (I know, I know.) So even with these current targets, it would seem unwise to pull back on stimulus by raising interest rates. But many economists argue that the inflation target should be much higher—somewhere in the 3 percent to 4 percent range.

Anybody who has been cheering on the recent recovery of the housing market should understand that inflation isn't all bad. Higher inflation would help eat away at the value of our $11.2 trillion in household debt—debt that is understandably holding consumers back from spending. Higher inflation also incentivizes consumers to spend now before prices rises, whereas low inflation or deflation incentivizes consumers to wait for a better deal later. And since household consumer spending is by far the single largest driver of our economy, nothing would do more to grow wealth and create jobs than to spur consumption.

Yes, a regime of modestly higher inflation and low interest rates does not directly work to the advantage of current retirees. But for the vast majority of retirees, nothing is more important than maintaining the benefits provided by Social Security and Medicare, and nothing would do more to bolster their trust funds than a broadly robust economy. So while higher interest rates might directly benefit our current generation of retirees, future generations of retirees will pick up the cost... the same generations who are already suffering most under our present high-unemployment/low-inflation/slow-growth economy.