The Fed's Going to Cut Back on the Money Supply to Control Inflation

When the Federal Reserve cuts back on the money supply to control inflation, you get higher interest rates as a consequence. Every one percentage point increase in interest rates is an additional 300 billion dollars a year in interest. And it gets worse than that, because we're not talking about one percentage point. If you look at some sort of historical average, we're looking at closer to four percentage points. I don't know what the number is going to end up being, but the Fed's going to have to seriously cut back on themoney supply to get the inflation under control.