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Carol Welcome To The Welcome To The Glenn

Beck program Hey Glenn lots of things to talk about Yeah boy I’ve I’ve got a long list for you too um so let’s let’s start with what happened yesterday and why people should care so I want to take a step back and talk about you know why the fed did what it did in terms of raising interest rates. What we call 25 basis points or a quarter of a percent 100 basis points is one percent and basically they were undoing um the if try at least attempting to start to undo the effects of what they in part cost their monetary policy. Zero interest rate policy printing trillions of dollars, the government spending trillions of dollars in terms of fiscal stimulus, turning parts of the economy off and wrecking the labor market and the supply chain. All of those things are the reasons we have inflation today exacerbated by decisions that the biden administration made around oil and gas dependence and whatnot so basically we had inflation which we’ve all been talking about and seeing as we go to the grocery store and certainly at the fuel pump and whatnot and so finally they said we have to do something now I’m going to tell you. This is a little bit of window dressing because they were doing accommodation.

• inflation
• recession
• fed
• fiscal
• treasury

They Were In The Market Purchasing Securities

last week so last week they were being accommodated. But this week we have to maintain our credibility and we need to do something so they decided to raise what is called the fed funds rate. It’s a rate where banks lend to each other overnight in terms of their reserves and that reverberates through the market so they had. brought that down to a target of zero to a quarter of a percent, and they had held it there for the last couple of years and they said Okay well, you know inflation’s getting away. We better raise some interest rates one of our tools in order to do that and they took the huge step of a whole quarter of a point increase to do yeah very very very meaningful because they need to be credible right the last time we had this problem of this size.

It Took An Interest Rate Of About 19

or 20 percent. If i’m not mistaken um raising it a quarter is is really is is a joke where do you think these interest rates should be not not considering killing the economy. I just where it should be should it. If we were in a healthy country still would it be. 20 or more so there are a couple things to unpack there First of all this is an unprecedented situation.

We Dont Have A Benchmark Because

We’ve never had central banks not just in the U.s, but around the world printing trillions upon trillions of dollars. This has just never happened before we’ve never had governments turn off the economy. You never have a situation where there’s 1. 7 jobs available for every job seeker because of what the government did so we’re flying a little bit blind.

Ive Always Been A Fan Of Normalized Interest

rates. I think it’s a horrible idea to have the fed meddling and trying to direct things. I want you. I want the market to set it and so before. All of this nonsense started before the financial crisis.

The Great Recession Financial Crisis And 0.

708, which was really the first time we we went. totally off the rails with the zero interest rate policy and the purchase of securities. The interest rates were around. You know five plus percent and you know that seems to be you know a healthy place where things should be.

We Should Not Be In A

place where we’re saying um you know when you take risk you shouldn’t be getting rewarded for it. You know zero percent interest it makes no sense so in reality I mean we’re still at very historically low interest rates and in a healthy economy. You know to have three four five percent would be completely acceptable. We just have been so addicted to this easy money and this free money for so long. I’m not sure how we get out of it okay, so there’s a couple of problems with five percent interest rates.

Right Now One Would Be That

people would not be able to afford new house, etc, etc. Because of inflation everything else but the other that nobody ever talks about is. We now have a national debt over 30 trillion dollars and that is just like buying a house. You have an interest rate on that if we had an interest rate of five percent. How much more money do we have to pay bingo.

This Is The Dilemma That The Fed

has gotten themselves into by keeping down interest rates. They’ve basically given the government a free pass to just spend and spend and to rack up more and more debt. And we’re at a point where the debt is completely out of control and you know has exceeded our level of GDP So if you think about 30 trillion of debts and obviously the fed funds rates and the interest rate on the debt isn’t a one-to-one correlation but we know that as one moves up the other moves up so in terms of the interest on our national debt. I want everyone to pay very close attention because this is staggering for every one percent increase that is another 300 billion dollars that we have to pay in interest on the national debt that is our tax dollars that are going to pay more for things that we have already purchased. It is not new purchases.

Its Literally A Finance Charge A

almost like credit card interest rate on stuff we have already bought and this is the dilemma. has because they know as they raise interest rates This is going to get out of control. The CBo had made a projection and saying that this is going to get out of control, but in their projection they said well, you know we think the yield on the 10-year Treasury note gets to about 2. 1 in 2025, so you know we’re going to have to really be concerned maybe In 2029. The yield on the 10-year Treasury note is at that 2.

1 Percent Today So Multiple Please Talk Down

to me like I’m in kindergarten. I i don’t understand the yield thing with the treasury how that works how that’s affected so can you explain that yeah so basically um it’s you know how much the government has to pay on the debt on debt so it’s what the market demands and obviously um you know if there is. of demand for treasury securities right the prices of that go up, then the the yield or the interest that you demand is lower. Because there’s a lot of demand. You have to pay a lot for your debts, but we had been at very very very low even because the fed was buying up.

• things reasons inflation today
• said okay know inflation getting
• government spending trillions dollars
• fed gotten keeping rates
• rates think horrible idea fed

There Was No Demand For Our Our

treasuries which is our loan so let me put in context what we are paying currently on our national debt In terms of a combined interest rate is somewhere in the neighborhood I’ve seen projections of you know 1.4 to 1. 6. So they’ve been able to finance that at a very low rate, but that number is starting to creep up and with the fed increasing interest rates. It will further creep up and every one percent is 300 billion dollars so if we have an interest rate.

Of Five Or Five Or Six Percent

we’re talking like between two and three trillion dollars more the entire budget exactly it’s just completely untenable at that point in time so I would I would imagine other things happen in the interim, but you know this is why when we talk about things like MmT modern monetary theory or why called magic money tree that says you well you can just print into infinity because we can just print more well. We are now living through that real time experiment as we’ve all said no you can’t it causes inflation. It has real costs for the average American and it decreases the value of every dollar that you hold all right so the best thing you can do is get out of credit cards. You should cut those up if you can and pay them off if you. can get a refi right now because you’re probably paying about 16 for your credit cards correct yeah I mean and it could be going up and anything that has that adjustable interest rate associated with some people may have something called an arm and adjustable rate mortgage where it’s you know it adjusts over time maybe it’s fixed for a certain number of years, but then it starts to flow anything that is adjustable rate debt is going to increase in price and if you if you need financing let’s say you have a business and you haven’t taken advantage of low rates.

Yet Youre Going To Want To Lock

that in on a fixed basis. Now because it’s not going to get cheaper anytime soon now the other problem the the problem with raising interest rates is let’s say you have a business and you need a loan. If if the interest rates start to go up that kills that business they can’t afford that loan just like we can’t afford our national debt or you want to buy a house yesterday mortgages. The new mortgages fell immediately or just on the the whisper that it was coming. We are seeing a slow down in mortgages, which means that people are going to buy fewer houses the the scary thing about this is you don’t know where that switch is you just kind of have to guess and it might shut everything down that’s the needle that the fed is trying to thread.

In Addition To Dealing With The

consequences of the national debt. What happens is as they raise interest rates you know their intention is to slow down the economy. I mean that’s basically what it is. They want to slow down consumer demand, but the question is you know how do you do that without creating a recession or without creating reverberations for the economics of the average American. Can I be really really cynical.

I Mean Let Me Let In Fact, Let

me go beyond cynical let me go into I’m a thriller writer okay and I’m writing a thriller and for some reason. This country needs to slow down the economy, but they can’t slow down the economy because then businesses will fail, but they don’t really care about the average person. You know what I mean that’s going to fail that’s fine we’ll print more money. We’ll put them on welfare or tell them to stay home or whatever wouldn’t one way to slow the economy for the consumer but not slow the economy for the big corporations would a war do that. I think that would completely change the tenor of the economy, but I think that raising the interest rates does that because kind of like we saw over the last couple of years.

If You Are A Big Corporation, Youve

taken advantage of that debt. You have that war chest you have that strong balance sheet. So in terms of the transfer of wealth. you know that is one way to do that but the war you know that would completely change the tenor of you know who benefits.

Summary

Carol Costello says the Fed raised interest rates yesterday and why people should care . Costello: The Fed was undoing the effects of what they in part cost their monetary policy . She says they were printing trillions of dollars, turning parts of the economy off and wrecking the labor market and the supply chain . The fed raised the fed funds rate from zero to a quarter of a percent to one percent . The move was a huge step for the Fed to raise the interest rate, she says, and it was a big step for them to undo what they had spent so much of the last couple of years on inflation and the Fed said inflation was getting away . The Fed raised the rate by 25 basis points to one per cent, but it was only one percent, she said, and the move was necessary to undo the effects it had to be done to reverse the inflation. Costello is a major step to undo that kind of inflation, and she says. It’s a big mistake….. Click here to read more and watch the full video