The “Great” News About the Fed Raising Rates (Hour 1)

**Dave Ramsey** (0:27)
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George Kamel, Ramsey Personality, is my co-host today as we answer your questions. Well, George, everybody is talking about the Fed raising the Fed rate of 75 basis points, three quarters of a percent of interest. And the Fed, of course, did this to stop inflation, to slow inflation.
This is weird. Okay. I don't know, understand. Well, I do understand because it's political crap. But here's the thing. Okay. If inflation is caused by, and there have been times in our history, where the economy just gets booming, and just the economy is just on fire, it's just burning white hot. And if inflation is caused by that, a rise in interest rates will slow inflation. The inflation that we're currently experiencing was not caused by that. It was caused by gas prices going through the roof because Biden stopped domestic oil production, because he's trying to be a greenie.
It's a problem. Inflation in this case is caused by Biden bucks causing paying people to not work. Consequently, they didn't work. Consequently, the ones that were working charge more. So it takes a $30 or $25 an hour person to put bread on the shelves now, and you used to pay them $10 an hour. By the way, the price of bread reflects the cost of labor. So the disrupted labor market by government's interference caused this inflation. Oh, and we had a supply chain disruption because of pandemic. This caused this inflation. None of those things are affected by interest rates. Raising interest rates by the Fed did absolutely nothing to stop this set of inflation.

**George Kamel** (2:32)
So do it more, they said.

**Dave Ramsey** (2:33)
Well, they're at the wrong party and they came late. I mean, that's the idiots in the government.

**George Kamel** (2:39)
And we got energy, labor, and supply chain are the real problems.

**Dave Ramsey** (2:42)
And none of those are impacted by interest rates. None of them.
None. I mean, you know, the gas prices are not the result of interest rates. They're not. The white hot economy wasn't there wasn't white hot in places. I mean, we had real estate booming, we had some other stuff, shortages and stuff. But the supply chain disruption was running labor lumber prices up. Lumber's back down 33% this month.
So you get ready to build a house, it's 33% cheaper on lumber than it was this time last year. Okay. So the inflation is correcting itself. And yet the Fed raises interest rates, but everybody's panicking and freaking out about this. The great news is, is that it doesn't do much of anything, except probably further drive us into a recession.

**George Kamel** (3:26)
Because this is slowing the economy down.

**Dave Ramsey** (3:27)
They're slowing the economy down, which was already slowing down and heading into a recession.
So we're getting ready to have something fairly unusual, which is inflation during a recession.
That's a fairly unusual economic thing, because usually the two are somewhat connected. In this case, because the speed or the velocity of the economy was not the cause of the inflation, you can actually have inflation caused by, you know, horrible domestic fuel price policy or fuel supply policy, right? So Biden is straight up causing that. That sticker at the pump, I did that. He absolutely did that, okay? He did not cause the supply chain disruption. That's not his fault. The Republicans are going to blame him for it, because they want to get everybody that has a D in front of their name out in the fall. But he didn't do that. It's not his fault, okay? Because he can't control supply chain. The president doesn't have that. But he can influence the Fed, and the Fed apparently is dumber than Iraq. Of course, we kind of knew some of these things. Because really, they used the wrong tool, they came to the wrong party, and they were late.

**George Kamel** (4:30)
So what is the solution? If you're the Fed, what's your move?

**Dave Ramsey** (4:33)
Just sit.
The best thing you can do in a capitalistic economy is let it correct itself. It will heal itself faster, because it's people acting in their own best self-interest. And it will heal itself faster if you let it run its course. Let these supply chain things run out. Do anything you can with policy or with regulations to smooth it, so that they can, the stuff can get on out of the ports, and get in people's stores again. That's what caused it, right? So the government screwed that up. You know, you got billions of goods sitting on the seas in the port at LA., billions of dollars sitting there for months. And that's all just stupid butt government regulations. That's all that is. And so you can smooth that out, but you can't fix that. You have to let it fix itself. The labor market, if you hadn't been throwing money at people, begging them to vote for you, then you wouldn't have had the labor market disruption.