Joel Griffith - Research Fellow, the Heritage Foundation , Joins Houston Morning News, August 1st, 2024

Episode Transcript

Speaker 1 (00:00):
Six twenty three. As I said, let's talk about with
Joel Griffith with the Heritage Foundation. FED is meeting, of
course this week, they're expected to leave interest rates alone.
In fact, I'm hearing maybe they leave them alone until September.
But as we get to September we start getting close
to the election, dob we.

Speaker 2 (00:16):
Joel, Well, the election is getting closer indeed, and there's
a lot of talk about whether or not that said
will lower interest rates. I really don't believe the decision
will be politically motivated. We've seen these rates on pause.
If anything, honest that the rates should be higher at
this point because the SEED has not completed its so

(00:36):
called mission of returning our long term interest rates. I'm sorry,
our long term inflation rate to just two percent. We're
still tracking significantly above that. Year over year, we're at
three percent, and indications are that those inflation rates could
begin to rise again, especially with government spending continue to

(00:56):
grow and are all time borrowing levels. We're approaching the
COVID levels as far as annual borrowing, which is going
to put further pressure on those rates as our government
is required to borrow more to stay afloat.

Speaker 3 (01:11):
Yeah, they've had to borrow more. The government has to
pay these interest rates. But who's the government to have
the interest rates come down? Because they have to pay
these interest rates too. A lot of this borrowing is
going to pay off our interest.

Speaker 2 (01:25):
No, absolutely, the interest right now in the debt rivals
we spent on our military and it's an excess of
twelve thousand dollars per year per family just on the
interest all loan. So whether or not the said lowers
rates by a quarter point or half a point later
this year, that will actually have very little impact on

(01:45):
our true economic growth. And our economic growth over the
last several years especially has been lower than the long
term average that we grew used to and that's a
large part because our government is draining more resources from
the private.

Speaker 1 (02:00):
Now you mentioned a moment ago, Joel, that interest rates
actually should be higher because the interest you know, the
interest rate needs to reflect what's still going on with inflation.
Is that politically motivated?

Speaker 2 (02:12):
Say even on this, I don't believe it's politically motivated.
But the situation that we are in today was created
because of politics, and speaking namely of what happened during
the last part of President Trump's presidency when we exploded
the federal budget to supposedly counter COVID. We grew far
beyond our means. We spent record levels, and the Fed

(02:35):
printed a lot of money to buy government debt in
order to fund those government operations. And here's the cats here.
When you print all of those dollars, that in and
of itself is inflationary. But money has a multiplier effect
when it's deposited in the bank and went down. Every
dollar that is created an effect can turn into ten
dollars as it's lent out by a bank, counted as

(02:57):
a deposit and then deposited the bank and lent out.
It's very problematic. And what the FEAT is trying to
do with these interest rates is contained the problem that
they created along with the politicians.

Speaker 3 (03:08):
Yeah, started as a trickle, though, let's give you story
about it started as a trickle, but passing things in
the dead of night, continuing to explode the economy and
the printing is what has happened in the last three
and a half years.

Speaker 2 (03:22):
Yes, yes, and now we're trying to contain that problem.
Its rates go down like any other product rate. If
the price of a good goes down, that will stimulate demand.
If the price of money goes down the interest rate,
it is going to stimulate demand for people to borrow more,
and that could lead to inflation getting out of control

(03:44):
once again.

Speaker 1 (03:45):
Yeah, exactly like a catch twenty two. All right, Joel,
thank you appreciated research fellow with the Heirtach Foundation, Joel
Griffith