09/01/2026
I’m questioning what we are told about .
We are repeatedly told that interest rates need to remain high to fight inflation.
Why?
The explanation is always the same:
Lower interest rates → people have more money to spend → demand increases → prices increase → inflation.
Why have we accepted that greater demand automatically means higher prices?
Think about a baker.
He bakes 100 croissants and sells every one. Then another 50 customers walk through the door wanting a croissant.
What is the smart business response?
Raise the price because the demand is there — or bake 150 tomorrow?
I'd say: bake 150.
If he simply raises his price because he can, he may eventually lose customers and hurt his reputation.
But if he can produce 50 more croissants, he sells more, earns more, buys more ingredients, perhaps hires another employee — and 50 more customers get their croissant.
That is economic growth.
Of course, if producing those additional croissants materially increases his costs, that's different. But why should increased demand by itself justify higher prices?
Now apply the same thinking to housing.
A builder has 100 homes available, but at today's mortgage rates only 70 buyers can afford them.
Mortgage rates come down and suddenly 100 people can afford those homes.
Wouldn't that be wonderful?
The builder sells 30 more homes. The builder makes more money. More families become homeowners. More economic activity is created.
Why must the price of those homes now increase?
The cost of building them didn't suddenly increase simply because more people wanted them.
More construction.
More jobs.
More materials purchased.
More investment.
More supply.
More competition.
Why is the Fed's response to healthy demand to SUPPRESS it by making money more expensive?
For decades, Americans have been encouraged to consume: Buy it!Finance it! Put it on a credit card! Replace it! Upgrade it!
And I believe American consumers have also helped keep this economy moving through difficult times by continuing to spend.
Then inflation arrives — and suddenly the consumer needs to be punished for spending?
There is another part of inflation we don't talk about and that is pricing.
When President Trump began his second term and energy prices declined, we heard arguments that lower energy costs would eventually work their way through the economy.
But did consumers see all of those savings reflected in the prices they paid?
If a company's costs decline, why aren't consumers as quick to benefit as they are to pay more when those costs increase?
The problem isn't always too much demand. Maybe we should also be talking about pricing behavior, competition and supply.
And nowhere is this more important than housing.
Housing is a necessity and one of the foundations of long-term wealth. Homeownership builds equity and stability, and we need investment to build the housing supply of tomorrow.
So why make mortgages, construction loans and productive business investment more expensive in the name of fighting inflation?
Businesses need to make a profit — and they should.
There are two ways to increase profits:
Sell more — or charge more
I'd rather see an economy where businesses prosper because they produce more, sell more, hire more and compete more.
Businesses benefit.
Workers benefit.
Consumers and families benefit.
The economy grows.
Why must greater demand automatically mean higher prices instead of greater production?
What are your thoughts?
And please don't just tell me, that more demand raises prices.
That's the status quo I'm questioning.
Maybe instead of suppressing prosperity to control inflation, we should be asking how to create MORE prosperity without allowing every increase in demand to become the reason for higher prices.
Key takeawaysThe average daily 30-year, fixed-rate mortgage rate rose to 6.87% on Monday, its highest level of 2026, according to Mortgage News
