It’s amazing how CNBC allows Rick Santelli to rant on and on each and every day achieving levels of cluelessness that have never been seen before. If I were running the network I’d be really embarrassed.
Earlier today Santelli was ranting about a Treasury proposal that is being considered whereby the U.S. would start issuing floating rate notes.
For those not familiar with floating rate notes, the interest rate paid “floats.” That means if interest rates go up, the interest paid on the notes increases.
Santelli was sounding the fire alarm as usual, saying, “If interest rates rise, then the government will have to pay more interest. It will be horrible, terrible, the end of the world, etc. blah, blah, blah.”
The one thing Santelli seems to forget (as he often does) is that the government (the Fed) sets rates. So, why would the rates necessarily rise? The Fed could easily decide to keep rates low like its doing now and the whole question of interest rate risk is moot. Anyway, the whole question of interest rate risk for a sovereign, currency issuing nation like the U.S. is moot anyway because it has a monopoly on rate setting.
But let’s say rates do rise because the Fed raised them. Why would that be so terrible? Since the government is a net payer of interest, a rate increase (which, again, could only happen via the Fed) would be equivalent to a rise in transfer payments (government payments to people) to the private sector. What’s so bad about that? It’s giving people money, and just another form of deficit spending. By the way…the largest component of the Reagan deficits was interest on the debt and…you guessed it…we had an ECONOMIC BOOM largely because of that.
Santelli is totally clueless. He’s ranting about things he doesn’t understand. On the other hand, my 11 year old son can understand this stuff.
By the way, if you think Santelli is clueless, what about Geithner? Presumably, he’s the guy proposing floating rate notes? Can somebody please tell Timmy that the government sets the rate it pays, so floating or non-floating, it’s all the same thing.
I often allow these comments to drive me crazy as you can see. Then I calm down and realize that it's all about television ratings, and it has nothing to do with real information of any kind. Many people don't realize that. They don't realize that it's ALL about ratings. They think it's real information. If it were about real information then people like Rick Santelli wouldn't have a career on television.
Then it hits me...if it's all about ratings, why are we allowing a stupid, ratings-driven business to affect our policy, our country and our lives?
Then I get crazy again.