The Fed wraps up its two-day meeting. We ask economist and money wiz David Bahnsen about results and the role of the Fed in general.
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Speaker 1 (00:00):
Previously on Your Morning Show with Michael del Choonho.
Speaker 2 (00:04):
R f K Junior's first confirmation hearing was the typical
attacks in Rocky Road. Everyone expected. President Trump had some
harsh words for the FED after it announced interest rates
would remain unchanged, which really gives us the teachable moment
of should the Fed be serving what the president would like?
(00:27):
Is that even on their radar? What is the Fed's job,
what is their role? What about it should exist, shouldn't exist?
And what about their decision to keep the interest rates steady?
Where they're at? David Bohnson is our economist and money
was David, I know you always have passionate comments about
the Fed. Talk radio may take this and run that.
(00:51):
You know, Feds against the President, and you know all
the conditions points they should have, what goes into their
consideration in these two day meetings and and what do
you make of their conclusion? And to keep the indust
rate steady, Well, it was.
Speaker 3 (01:04):
A no brainer. They were going to keep them steady
at this point.
Speaker 4 (01:07):
What's hilarious to me is those that were critical of
them cutting before saying, oh, they're still inflation and they
need to keep rates higher to fight inflation.
Speaker 3 (01:18):
And then now those same people saying why aren't they
cutting more? Still? You know, with President Trump in office.
Speaker 4 (01:26):
Look, the FED does things I disagree with all the time,
but I do not believe that the criticism ought to
be centered around one's partisan or political connectivity. They make
monetary policy decisions that are.
Speaker 3 (01:39):
Either right or wrong.
Speaker 4 (01:40):
Their jurisdiction is something people either believe is right or wrong.
Speaker 3 (01:44):
I have opinions on all of that.
Speaker 4 (01:46):
But they did not do anything ever to help President Biden.
If they were trying to help President Biden, they did
a very bad job of it. They most certainly, But
I also want to point out they must certainly do
not make the decision to not cut rage yesterday to
hurt President Trump. It's been a one hundred percent chance
(02:08):
in the futures market that is pricing in FED activity,
one hundred percent chance they were not going to cut
rage yesterday for over two months. So this is justly
not a political decision. It's a byproduct to the fact
that they quickly cut rates one hundred basis pointes one percent,
and now we're slowing down to allow things to breathe.
Speaker 2 (02:32):
All right, So give everybody kind of a crash course
because sometimes we get deep in the woods on financials,
we lose people that don't think about that, but out
of control spending with no creation beyond I think back
to COVID. To just pump trillions of dollars into the
economy unearned is inflationary. Then the FED comes along and
(02:52):
raises rates to cool that off to avoid recession. Walk
us through that basic concept. Then, where we're at in
reality now and why it would point to doing nothing
for a little while longer.
Speaker 3 (03:04):
Well, well, first of all, it isn't to avoid recession.
Speaker 4 (03:07):
A lot of people believe that when you want to
raise rates to cool inflation, to create a recession. Now,
I don't believe that because I don't believe that economic
growth is inflationary, and I don't believe that economic contraction
is anti inflationary.
Speaker 3 (03:23):
But that's what the kind of consensus.
Speaker 4 (03:26):
In academia is, is that inflation comes on an economy
gets too hot. It's an utterly ridiculous idea, but I've
listened to many Republicans say it for the last several years,
so it's now become a bipartisan piece of nonsense. Inflation always,
in forever comes from too much money facing too few
goods and services. Right, And so you're right that there
(03:49):
was a bunch of money pumped into the economy at
the COVID moment in twenty twenty, the last fewyear of
President Trump's term. Then President Biden came in and added
more money in.
Speaker 2 (04:01):
But the really.
Speaker 4 (04:02):
Important part, and we've talked about this on the show
at least a dozen times, is the second half of
the sentence, facing too few goods and services. You did
put a bunch of money into the economy, but you
also did it when we turned the production of the
economy off. That was the inflationary moment, supply chain shutting down,
(04:24):
the energy production shutting down. There were a variety of
circumstances whereby production was shut down, but consumption did not
slow down. We reopened to the economy when people finally
had enough and they all wanted to go back to
their normal lives, which is what human beings do. But
the production wasn't there, the labor wasn't there, and shot
(04:46):
prices higher.
Speaker 3 (04:47):
Took about two years to work out of the system.
Speaker 2 (04:49):
Well, the notion you could flip off, the notion you
could flip off the economy like a light switch and
turn it right back on. That was a miscalculation. Obviously,
more manufacturing, returning, creating goods and services along with jobs
is what is necessary to fix the economy. Is it
a misconception and wrong for people to think, oh, well,
when the interest rates come down, that means we're going
(05:11):
in the right direction, because you may not want them
to come down.
Speaker 4 (05:15):
Well, interest rates going up or down don't tell you
anything about what it means the economy, the reasons they're
going up or down, Matt, I tell you so, two
thousand and eight, they brought interest rates to zero percent.
Speaker 3 (05:29):
Did anyone feel like that was a good thing? We
were in the worst processions?
Speaker 2 (05:33):
Well, I do like my home mortgage at two point
four I'll just tell you that.
Speaker 3 (05:37):
But yeah, well, yeah, but that's assuming you kept your home,
which about fifty percent of people weren't doing. So, you know,
people were losing homes, losing.
Speaker 4 (05:46):
Jobs, on employment state around ten percent for almost two years.
Speaker 3 (05:49):
It was an absolutely ghastly.
Speaker 4 (05:51):
Period of American history, brutal, and yet inducates will learn
lower this is a rare extent. Now, it's not unprecedented,
but this is a rare moment where we're cutting rates,
not because the economy is in recession, but simply because
we let them run very high for a long time,
and so they're trying to avoid future economic damage from it.
But no, I don't think that there's anything wrong within
(06:14):
cutting rates now, and in terms of the decision to
slow the pace of cuts, it was very expected.
Speaker 3 (06:20):
But they're in a pickle because housing is frozen and
they need to get rates lower to unfreeze housing.
Speaker 2 (06:27):
Yeah, that's that's a pretty good description of the pickle.
David Bonnson with the Boonson Financial Group joins us every
Thursday or sooner of conditions. Warren, thank you so much
for your time, sir, on a very sad and distracted morning.
Speaker 1 (06:38):
Miss a little, miss a lot, miss a lot, and
we'll miss you. It's your morning show with Michael Delchruna
Previously on Your Morning Show with Michael del Choonho.
Speaker 2 (00:04):
R f K Junior's first confirmation hearing was the typical
attacks in Rocky Road. Everyone expected. President Trump had some
harsh words for the FED after it announced interest rates
would remain unchanged, which really gives us the teachable moment
of should the Fed be serving what the president would like?
(00:27):
Is that even on their radar? What is the Fed's job,
what is their role? What about it should exist, shouldn't exist?
And what about their decision to keep the interest rates steady?
Where they're at? David Bohnson is our economist and money
was David, I know you always have passionate comments about
the Fed. Talk radio may take this and run that.
(00:51):
You know, Feds against the President, and you know all
the conditions points they should have, what goes into their
consideration in these two day meetings and and what do
you make of their conclusion? And to keep the indust
rate steady, Well, it was.
Speaker 3 (01:04):
A no brainer. They were going to keep them steady
at this point.
Speaker 4 (01:07):
What's hilarious to me is those that were critical of
them cutting before saying, oh, they're still inflation and they
need to keep rates higher to fight inflation.
Speaker 3 (01:18):
And then now those same people saying why aren't they
cutting more? Still? You know, with President Trump in office.
Speaker 4 (01:26):
Look, the FED does things I disagree with all the time,
but I do not believe that the criticism ought to
be centered around one's partisan or political connectivity. They make
monetary policy decisions that are.
Speaker 3 (01:39):
Either right or wrong.
Speaker 4 (01:40):
Their jurisdiction is something people either believe is right or wrong.
Speaker 3 (01:44):
I have opinions on all of that.
Speaker 4 (01:46):
But they did not do anything ever to help President Biden.
If they were trying to help President Biden, they did
a very bad job of it. They most certainly, But
I also want to point out they must certainly do
not make the decision to not cut rage yesterday to
hurt President Trump. It's been a one hundred percent chance
(02:08):
in the futures market that is pricing in FED activity,
one hundred percent chance they were not going to cut
rage yesterday for over two months. So this is justly
not a political decision. It's a byproduct to the fact
that they quickly cut rates one hundred basis pointes one percent,
and now we're slowing down to allow things to breathe.
Speaker 2 (02:32):
All right, So give everybody kind of a crash course
because sometimes we get deep in the woods on financials,
we lose people that don't think about that, but out
of control spending with no creation beyond I think back
to COVID. To just pump trillions of dollars into the
economy unearned is inflationary. Then the FED comes along and
(02:52):
raises rates to cool that off to avoid recession. Walk
us through that basic concept. Then, where we're at in
reality now and why it would point to doing nothing
for a little while longer.
Speaker 3 (03:04):
Well, well, first of all, it isn't to avoid recession.
Speaker 4 (03:07):
A lot of people believe that when you want to
raise rates to cool inflation, to create a recession. Now,
I don't believe that because I don't believe that economic
growth is inflationary, and I don't believe that economic contraction
is anti inflationary.
Speaker 3 (03:23):
But that's what the kind of consensus.
Speaker 4 (03:26):
In academia is, is that inflation comes on an economy
gets too hot. It's an utterly ridiculous idea, but I've
listened to many Republicans say it for the last several years,
so it's now become a bipartisan piece of nonsense. Inflation always,
in forever comes from too much money facing too few
goods and services. Right, And so you're right that there
(03:49):
was a bunch of money pumped into the economy at
the COVID moment in twenty twenty, the last fewyear of
President Trump's term. Then President Biden came in and added
more money in.
Speaker 2 (04:01):
But the really.
Speaker 4 (04:02):
Important part, and we've talked about this on the show
at least a dozen times, is the second half of
the sentence, facing too few goods and services. You did
put a bunch of money into the economy, but you
also did it when we turned the production of the
economy off. That was the inflationary moment, supply chain shutting down,
(04:24):
the energy production shutting down. There were a variety of
circumstances whereby production was shut down, but consumption did not
slow down. We reopened to the economy when people finally
had enough and they all wanted to go back to
their normal lives, which is what human beings do. But
the production wasn't there, the labor wasn't there, and shot
(04:46):
prices higher.
Speaker 3 (04:47):
Took about two years to work out of the system.
Speaker 2 (04:49):
Well, the notion you could flip off, the notion you
could flip off the economy like a light switch and
turn it right back on. That was a miscalculation. Obviously,
more manufacturing, returning, creating goods and services along with jobs
is what is necessary to fix the economy. Is it
a misconception and wrong for people to think, oh, well,
when the interest rates come down, that means we're going
(05:11):
in the right direction, because you may not want them
to come down.
Speaker 4 (05:15):
Well, interest rates going up or down don't tell you
anything about what it means the economy, the reasons they're
going up or down, Matt, I tell you so, two
thousand and eight, they brought interest rates to zero percent.
Speaker 3 (05:29):
Did anyone feel like that was a good thing? We
were in the worst processions?
Speaker 2 (05:33):
Well, I do like my home mortgage at two point
four I'll just tell you that.
Speaker 3 (05:37):
But yeah, well, yeah, but that's assuming you kept your home,
which about fifty percent of people weren't doing. So, you know,
people were losing homes, losing.
Speaker 4 (05:46):
Jobs, on employment state around ten percent for almost two years.
Speaker 3 (05:49):
It was an absolutely ghastly.
Speaker 4 (05:51):
Period of American history, brutal, and yet inducates will learn
lower this is a rare extent. Now, it's not unprecedented,
but this is a rare moment where we're cutting rates,
not because the economy is in recession, but simply because
we let them run very high for a long time,
and so they're trying to avoid future economic damage from it.
But no, I don't think that there's anything wrong within
(06:14):
cutting rates now, and in terms of the decision to
slow the pace of cuts, it was very expected.
Speaker 3 (06:20):
But they're in a pickle because housing is frozen and
they need to get rates lower to unfreeze housing.
Speaker 2 (06:27):
Yeah, that's that's a pretty good description of the pickle.
David Bonnson with the Boonson Financial Group joins us every
Thursday or sooner of conditions. Warren, thank you so much
for your time, sir, on a very sad and distracted morning.
Speaker 1 (06:38):
Miss a little, miss a lot, miss a lot, and
we'll miss you. It's your morning show with Michael Delchruna
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