How Can We Save the American Dream?

The recent decision by the Federal Reserve to cut interest rates was proclaimed to be “a new chapter in the D.C. Cartel’s long march toward the bankruptcy of our nation” by Richard Stern, the director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation. It definitely looks like the decision was made for a political reason rather than the good of the nation. 

The decision may bring “some relief from higher interest rates for consumers and businesses,” but it may also fuel the “fires of inflation.” However, the fact that “prices for essentials” have risen “over 20%,” the decision does not “prioritize the interests of the American people.” Stern then listed “the five key things” that Americans must know about the rate cut by the Federal Reserve and what it means to Americans and their families.

1. Federal Spending Real Cause of the Problem.

The federal government has recklessly expanded in recent years, redirecting more of your hard-earned money into the hands of bureaucrats and their allies. Federal spending either can be paid for through taxes or borrowing.

Tax increases, of course, harm Americans in a direct manner by taking from your paycheck and bank account. Borrowing, on the other hand, creates a more insidious and obscure harm. The federal government can crowd out private investment and eat everyone’s lunch off the money market buffet table….

Without cutting government spending, any Fed action is merely a form of rearranging deck chairs on the Titanic of debt.

2. The Fed Chooses High Inflation Over High Interest Rates.

This dynamic means that the Fed is left with only a Sophie’s choice between high inflation and high consumer and business interest rates. For roughly the past three years, the Fed has tried to restrain the money supply to reduce inflation at the risk of increasing interest rates – and it has….

3. Decision Comes Right After Federal Interest Costs Top $1 Trillion a Year.

Of course, the Federal Reserve’s decision comes right after federal spending on annual interest payments broke $1 – close to $8,000 per American family per year. When interest rates are high, it isn’t only consumers and businesses that face high rates, it’s also the government.

Reversing the course back to lowering rates at the expense of higher inflation seems rather self-serving for the government when viewed through this lens.

4. This Rate Cut Comes Suspiciously Right Before Election.

The Fed’s actions always take time to permeate through the economy. And although tightening conditions can have faster impacts on sending interest rates higher, in monetary loosening it takes more time for inflation to be seen.

This is because markets tend to react quickly to the specter of scarcer money by sending rates higher, but prices rise only as the newly created money fully flows through the economy. As such, the Fed’s decision to cut rates – and increase the money supply – likely will lead to a flurry of activity now, with inflation coming in well afterward….

5. The Problem Only Expected to Get Worse.

Disturbingly, the problem is likely to get worse. Modest estimates from the Congressional Budget Office suggest that we can expect to add at least $20 trillion to the national debt – ballooning it to well over $400,000 per American household.

Whiplashing between high inflation and high interest rates will only continue to grow in intensity if the debt continues on this path.

Unless there are serious cuts to planned federal spending and debt accumulation, this burden will continue to grow without end. Whenever the government spends a dollar, it commits to steal that dollar from hardworking American – either through taxes, or through borrowing and money-printing.

Stern presented only one solution: “restrain government spending” before it destroys the American dream. The bottom line is that we need more Americans working and paying taxes and fewer Americans expecting the government to provide for them. We need to elect Donald Trump who will lessen the number of regulations holding back the economy, control the number of people coming into our nation, and make America great again.