Stephen Moore

What happened to mortgage rates after they cut the Fed funds rate?

They went up.

Why did the mortgage rate go down?

Well, except that when the fed funds rate is cut, that pushes more money into the economy, right?

It's a short term sort of stimulus because you get this more money in the economy, but that tends to lead to what?

more inflation, right?

Because as Milton Friedman taught us, inflation is just too many dollars chasing too few goods.

So my point is, I'm not so sure that lowering rates, and I'm not against a rate cut, but it's not like, people think that the Fed chairman is like the Wizard of Oz behind a curtain.

He can just push a button or pull a lever and make the economy go

work.

I mean, that's, that's not the way it happens.

And so, um, I think what we want is stable prices.

We want to get that inflation rate down to 2%.

I think we're headed there.

Uh, so I'm fine with lowering the rates maybe once or twice, but don't do it too much or else you're going to get a recurrence of the high inflation that we had under Biden, which is the last thing.

Well, first of all, there's two things.

He can adjust the interest rates up and down, but he has to monitor.

He wants to keep the inflation in that right target.

The other thing is the Fed has a massive balance sheet of trillions and trillions of dollars.

And why?