EconAir

    INTRODUCTION These projections are from the Congressional Budget Office. They are updated every two years. Basically, they are trend projections of existing programs and tax revenues. They assume that events such as recessions, epidemics, wars or new programs to fight the effects of global warming will not happen over the next ten years. Good luck! I first wrote this post about seven years ago. I update it about every two years. Every time it gets more depressing. When interest rates the government paid on the national debt were very low, no one in the government talked about the rising interest expense and what to do about it. But now with higher interest rates, interest expense is rising rapidly and becoming a visible part of government budgets. Interest expense is rapidly approaching defense expenditures. Even if interest rates stay where they are now (7/24), increased interest expense will eat up most of the projected increased tax revenue over the next ten years. Inter

  The Red Queen's Race TWO DEFINITIONS   Fed funds rate .    The Fed funds rate is the interest rate banks charge other banks that borrow their excess reserves. It is a very short-term (overnight) rate. An increase in the Fed funds rate increases the cost of capital of large banks (net borrowers) and puts pressure on these banks to raise their lending rates. A change in the rate also changes the rate charged by other sources of short-term funds.   The Fed funds rate is the most watched interest rate in the United States and probably the world. It is not set by supply and demand in financial markets. It is set (fixed) by the Federal Reserve Bank (the Fed), America’s central bank.    The Fed funds rate determines or heavily influences almost all other short-term interest rates in financial markets. It also indirectly influences many other longer term interest rates. It summarizes how the Fed views the economy and near-term changes. It is at the heart of monetary policy.    Nominal vs

Written by Andrea Dragon, Ph.D. Andrea investigates and writes about New Jersey's industrial history. Professor Dragon will be teaching a continuing education course on "New Jersey's Explosives History" at Rutgers - New Brunswick in the fall, 2024. For details, see the fall catalog at  olliru.rutgers.edu . The course is described on page 31.   1914:  World War I Breaks Out   Russia started to modernize its army in 1913, with substantial French financial and weapons support. The beginning of a five-year plan, one of the main goals was to expand artillery to catch up with Germany. But war broke out.    After the first four months of the war, all combatants realized they were in for a long war with deadly modern weapons. Every country’s strategy of a quick victory through offensive warfare failed. Germany did not defeat France and England in the west, and the Russian offensive against Germany in the east ended in disaster. The result was four years of trench warfare in t