EconAir

Secretary of the Treasury UPDATE (8/2026) The expected yearly deficit for fiscal year 2026, ending September 30, 2026, is $2.1 trillion. This is higher than the deficit of $1.9 trillion in fiscal year 2025. One reason is that the expected $200 billion increase in government revenue from increased tariffs has to be refunded to importers and American companies because the Supreme Court declared the tariffs unconstitutional. The national debt will be around $40 trillion by the end of this fiscal year. Total interest expense will be around $1.1 trillion, with the interest rate a little under 3%. Thus interest expense is now half of the total yearly deficit. Another way of looking at this is that half of the yearly deficit goes to paying interest on the national debt. Projections are that the national debt will be around $50 trillion in five years (FY 2031). Yearly interest expense might be between $1.5 trillion and $2.0 trillion, which assumes an interest rate of 3% to 4%. Thes...

    INTRODUCTION   Even after 97 years since the start of the Great Depression, there remains controversy about the causes. It is possible to draw up a list of probable causes but there is no consensus about the relative importance or the interaction of the causal variables.   GENERAL APPROACH   The basic approach of modern macroeconomic theory is to view a national economy as a relatively stable, self-equilibrating mechanism that is capable of sustained economic growth over a long period. Recessions and inflationary periods occur because of some kind of “external shock” to the system that impacts components of aggregate demand or aggregate supply. In this model, external shocks (exogenous variables) include the sudden and large increase in the cost of vital inputs such as oil, sudden and large changes in competition from imports or fall in the demand for exports, unexpected changes in nominal interest rates, monetary policy by the Fed, and fiscal policy (govern...