The Federal Reserve’s Open Market Committee voted yesterday to tighten monetary policy. Before the vote even took place, the Kerry campaign was spinning it, in comments to the Wall Street Journal, as the fault of President Bush, presumably for running up a deficit. Don’t believe it.

There are few areas of economics more apt to be the subject of confusion than the nexus of inflation, interest rates, and banking, so let’s clear a few things up. First, the Federal Open Market Committee is an extremely limited institution. It can only do one thing: decide whether to create or destroy money. Bob Woodward referred to Alan Greenspan as “Maestro,” but just like back in his days as a professional musician, Mr. Greenspan really only has one instrument to play. Now it’s money.

Because he just has one instrument then he should only have one job — ensuring that the dollar remains a stable unit of measurement whose value does not fluctuate over time. The Fed is not in charge of the stock market, no matter how irrationally exuberant its valuations may appear. It is not in charge of stimulating lethargic recoveries, nor of tamping down overheated growth rates. America already has a president and a Council of Economic Advisors, a Treasury Secretary, and the Congress to deal with those issues.

One of the reasons that this area is so subject to confusion is because it is often described with language that is inaccurate. For instance, the Fed does not “lower interest rates.” What it really does is buy bonds from the banking system as a means of pumping money into the economy. Conversely, when it is reported that the Fed has decided to “raise interest rates,” it means that they will sell federal government bonds to the banking system as a means of siphoning excess money out of the economy. A minor by-product of yesterday’s decision to stop the torrent of money going into the banking system is that at the short end of the curve (where banks lend to one another overnight), rates will rise. On the other hand, at the long end of the curve — which drives mortgages, school loans, and business borrowing — high rates are likely to be avoided.

The short-term rates are heavily influenced by the Fed, but the long-term rates are set by the market. And over the last month, interest rates on 10-year Treasury notes have been declining. They are lower now than they were at the end of the Clinton administration, which the Kerry types praise for being tough on deficits. Take an interest rate that really matters to a lot of regular people — the 30-year fixed mortgage rate for a home loan of $300,000 or less. In December 2000, the last month of Bill Clinton’s presidency, the national average rate was 7.58%, according to a survey of 2,000 lenders by HSH Associates. Today’s average is 6.35%,according to HSH. The lower rates mean lower mortgage payments for new homeowners and for those who refinance their existing mortgages. In other words, if the Bush deficits are driving interest rates, homeowners should be begging for more of them.

This is why born-again deficit hawks among the Democrats are wrong when they suggest that yesterday’s announcement has anything to do with the deficits. In their world, deficits cause high interest rates. Never mind the fact that even though we’ve moved from surpluses in the year 2000 to a $420 billion deficit now, long-term interest rates have actually fallen. When the Fed changes policy direction from creating money to destroying money, it is in effect doing something that will prevent high long-term interest rates, because it is fighting inflation.

If the new generation of deficit hawks is wrong about yesterday’s fed action, so is the spin put on it by many in the press, who suggest that the Fed can tighten money supply now that loose money policy has finally led us out of the doldrums. Translation: Mr. Greenspan saved us from the recession and now he can let up on the accelerator. The notion that you can use the printing press to grow the economy is still alive and well in the Fourth Estate. In the early 1980s, President Reagan and Chairman Volcker turned economic orthodoxy back onto its feet when the former fought stagnation with tax cuts and the latter fought inflation by decreasing the money supply. Commentators are right when they at long last acknowledge the boom, but wrong when they credit Mr. Greenspan without crediting Mr. Bush.