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June 18, 2022 - The Dan Bongino Show
08:54
The Bongino Brief - June 18, 2022

The hike in the Federal Fund Rate is going to hurt you and your monthly payments Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Dan Bongino.
Welcome to the Bongino Brief.
I'm Dan Bongino.
Folks, I had said to you that the Federal Reserve, which has this federal funds rate that they were going to hike to combat inflation, that the federal funds rate and interest rates matter because in a middle class, largely middle class society like we have here in America, People live, I don't want to say live paycheck to paycheck in a bad way.
A lot of people don't have, you know, two, three years of income sitting in their bank account.
They just don't.
It's not a common practice.
So we live our lives either paycheck to paycheck or month to month.
So when we buy things that are big ticket items in the United States, cars and homes, we tend to buy them on monthly payment plans, either mortgages or auto loans.
The problem with that is the monthly payments on monthly payment plans go up dramatically when interest rates go up.
That's why this story from the Washington Examiner about what happened at the Fed is such a big deal.
The Fed conducts a historic interest rate hike in a desperate bid to control inflation.
Zach Halashek.
They raised it by 75 basis points.
Three quarters of a point.
Point seven five.
Sorry, it's liberals listening.
We gotta be slow here, right?
That's a huge hike.
Unfortunately, they need a lot more.
They're not even close to where they need to be to crush inflation.
The interest rate, the federal funds rate right now, which is hovering in the 2 range, needs to be up in the 5 or 6 range, at a minimum.
And it's not.
There's going to be more of this.
They say they're only going up.
They're not coming down any time soon.
Why does this matter for you?
Why should you care?
Well, because when the interest rate, the federal funds rate, goes up, It affects everything from what they do, from what the Fed pays on bank reserves to what they pay on reverse repos.
All of this stuff affects interest rates throughout the entire economy because banks have accounts at the Fed.
Long and short of it is when they hike rates, everyone else hikes rates too.
And what does that mean for you?
It means a lot of what you're paying monthly, home loans, credit cards and auto loans, are going to go up and they're getting ready to go up a lot.
Axios, pretty far left side, but once in a while again, Blind Squirrel gets a nut.
Had a good piece about Mike Allen.
That's pretty decent, Marshall.
That's Axios.
He says one big thing.
How the rate hike hits you.
What have we been talking about, Joe, for months?
Monthly payments.
This is what matters.
He nails it right here.
Here's why this matters to you.
Your monthly payments.
Number one, home loans.
The average rate for a conventional 30-year fixed rate mortgage now tops 6%.
Last year, what was it?
3.1%.
You know what that means?
That means your mortgage monthly payment, if you're on an ARM adjustable rate, which adjusts, I believe, every six months, not a year like it used to be, is about to go up and go up a lot.
This is kind of a big deal.
Second, credit card debt.
You make monthly payments, right?
Mike Allen notes the average credit card debt hit 16.7% up from 16% last year.
Credit card rates are tied closely to Fed's moves.
Thank you!
And are expected to keep rising.
Squeezing consumers who carry a balance.
Pay, start, do what you can right now, if you have the money spared.
Pay some extra home loan, get that principal down, get that credit card debt paid down.
Listen, I'm not Dave Ramsey, it's not a financial show, it's just common sense.
Like Dave, those shows focus on this all the time.
This is the time now to get rid of some of that debt.
All monthly payments.
What's the last one?
Mike Allen Axios Auto Loans.
Want to buy a car?
Well, rising interest rates and increasing prices have already pushed the average monthly car payment to an all-time high of $656 for new vehicles and $546 for used cars per admin.
Ouch.
vehicles, and 546 for used cars per Edmund.
Ouch.
Yeah, yeah.
I mean, we've only been saying this for eight years now.
People live on the monthly payment.
Nobody, well, I shouldn't say nobody, because ever since I entered the entertainment business, some people have some cheese.
Nobody I grew up with, or in my family, I should say, buys a car in cash or buys a home in cash.
Interest rates go up, you get hammered.
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Again, I do think this is going to get better.
Remember, the hassles of the 70s with stagflation brought us the Reagan era.
And ladies and gentlemen, 1983 or so through 1990 were some of the best economic years we've had in the history of the United States.
Reagan-Bush era.
I think we're headed there again.
But there's going to be some short-term pain.
Why?
Because the Biden administration is doing absolutely nothing to fix this problem, and candidly, folks, is making it a lot worse.
The only thing that's going to course-correct this buffoon in the White House is an electoral just destruction in 2022 by these guys.
They all need to go.
Grover Norquist has a good piece, Five Problems with Biden's Inflation Plan, Joe.
Yeah, plan to make it worse!
Here's the most important one.
Biden's planning a tax hike.
He wants to hike our corporate tax from where it is now, 21% to 28%.
That's a rate higher than communist China and the average rate in Europe.
Grover notes, these tax increases will not be paid by large corporations but will be passed along to working families in the form of higher prices.
Bingo!
He even cites a 2020 study by the NBER.
Found that 31% of the corporate tax falls on consumers.
You know where most of the rest falls?
On the employees in the company.
So just to be clear, Joe Biden's plan here to combat higher prices is to take more money out of your wallet to higher taxes?
That's such a good plan!
And the second part of his plan, Joe, is to take money out of workers' pockets so they're less productive, so they produce less supply, which will decrease the supply with an increased money supply, which will make the inflation problem even worse?
Sounds like a genius plan to me, while he wants to spend more money we don't have, which will make the Federal Reserve print more money to give to the government to buy stuff that we can't afford.
Sounds like a plan for more inflation to me, and I'd be right.
I told you about inflation.
I've been telling you for eight years.
I told you this coming summer, I think things are going to get worse based on publicly available data, folks.
I saw some guy in a, I, I, I follow a lot of blogs cause I really enjoy, I like what people, you know, what people are saying about the show, good and bad.
But I saw a guy on a blog site saying, you know, saying August is going to get ugly.
Everybody's like, yeah, he's always saying that.
He is?
The data's out there for you.
You just want to ignore it?
Layoffs plan.
The PPI up.
This is all publicly available, folks.
The producer price index through the roof.
CPI at 8.6.
Even their CPE, their lower level.
What is that?
Is that six something?
Even when you exclude food and gas?
Tax increases potentially on the table.
More regulations.
This doesn't take a genius.
I'm trying to do you a favor.
We can ignore it and we can pretend, oh yeah, everything's going to be great, folks.
Do nothing.
I'd rather see the unproposed solutions.
Pay off your debt.
Get prepared.
Pick up some food.
Can't hurt you.
The best day of your life is when you throw it out later on.
The Dan Bongino Show.
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