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Showing posts with the label Fed

THE CONGRESSIONAL BUDGET OFFICE (CBO) FORECASTS THE FUTURE

  According to the latest Congressional Budget Office (CBO) long-range forecast, government revenue will be $1.3 trillion more in 2030 than in 2020. Government debt will increase $10 trillion, from $30 trillion to $40 trillion in the same time period. If the average interest rate in 2030 is 4%, below the long-term average of 5%, then interest on the national debt in 2030 will be about $1.0 trillion higher than in 2022. Thus, most of the increase in federal tax revenue will go to pay for the increased interest expense on the national debt.   In every year in this interval, the deficit - the increase in the national debt - will be greater than the increase in revenue.   If the national debt rises to $50 trillion over the next eight years, as some analysts expect, then the increase in interest expense, at 4%, will be about $1.4 trillion. Thus, all the increase in revenue will just pay for the increase in interest expense.   CBO forecast is probably optimistic. By law, the forecast cannot

The Stock Market Crash of 1929 and the Beginning of the Great Depression

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Famous Headline Introduction The usual reasons given for the Great Depression – the stock market crash of 1929 and the later collapse of the banking system – do not tell the whole story. Available economic data indicate (there were no national income accounts in 1929) that a recession had already begun before the stock market crash. The crash of October and November of 1929 was a catalyst that made the recession worse but the partial stock market recovery in early 1930 did not end the recession. Industrial production continued to fall quickly and unemployment rose rapidly in 1930. Continuing farm and businesses failures over the next two years wiped out thousands of small rural banks and threatened total financial collapse in early1933.  For a fuller explanation, we have to go back to the 1920s to see additional reasons for the origins and the rapid decline in output at the beginning of the Great Depression. We have to look at the internationa