CATO economist and PPD contributor Dan Mitchell joined Neil Cavuto to discuss Fed Chair Janet Yellen and the FOMC raising interest rates this year. Mitchell said there are two things that need to concern Americans with respect to inflation and raising short term interest rates.
First, the cost of borrowing money, considering the government’s massive national debt, will increase and even more of the federal budget will have to be allocated for servicing existing debt.
“That’s just going to add to the fiscal burden on taxpayers,” Mitchell said. “But secondly, if we do have a bubble and that bubble bursts, that of course causes instability in financial markets. Either way, I think the lesson we should be learning is–maybe we shouldn’t have had artificially low interest rates in the first place that encouraged all this debt.”