Inflation

February 10, 2022

Hello, everybody out there in farm country. This radio commentary is brought to you by the National Corn Growers Association, CropLife America, and Renewable Fuels Association. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.

And now today’s commentary-

I am concerned, and I am not alone. I remember the skyrocketing interest rates of the late 1970’s and early 1980. Farmers and ranchers along with other borrowers were paying 12% to 16% interest on their loans. Farmers borrow money almost every year to finance fertilizer, seed, chemicals, and machinery to plant, care for, and harvest their crops. The inflationary costs destroyed thousands of farms and all kinds of family businesses.

My concern is – are we headed down that road again? Our debt costs are very low now, but the
best way to hammer down inflation is to raise interest rates. That’s what they did in the early 1980s.
The Federal Reserve kept pushing rates up. I was Secretary of Agriculture then and met with our
Federal Reserve Chairman Paul Volker twice encouraging him to cut the rates. He said that he had
no choice. He had to fight inflation by raising rates. I guess it worked. Rates came down, but
businesses and families paid a big price.

Turn the calendar to today. U.S. government debt just passed $30 trillion. That’s more than 100%
of GDP. That is a number previously reached only during wartime. And for our government the
biggest risk will be the interest we will have to pay on all that debt. We have been getting along
fine on near zero interest on our debt, but what if it goes up like it did in 1980. To pay the interest
on our growing debt we will have to raise taxes or just stack up more debt.

I am concerned about the explosion in government spending. Our government has been extremely
generous with money handouts to help our businesses and families safely through the Covid-19
pandemic. It is time now to put the brakes on spending. Our economy looks good. Unemployment
of 4%. I’m sorry to say – all the Congress wants to do is flood the market with money. We used to
think balancing the budget was the right thing to do. A lot of our politicians don’t seem to care
much about that now. Free money and near zero interest rates will fan the flames of inflation. That
could be a serious, costly road to bankruptcy for many small businesses and families.

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