kgbw49 Low interest rates make it easier for the Federal Government to sell more debt - borrow more - because the payments are lower. On $20 trillion in outstanding Federal debt which is growing by $400-$500 billion annually, if the 10 year Treasury ever returns to historical levels of 5% or so, the annual Federal deficit will balloon by hundreds of billions of dollars more than than it currently is. That is because the new debt will come on at a higher interest rate plus any outstanding debt that is reaching maturity has to be rolled over at a higher rate. That then will cause an even bigger annual Federal deficit requiring even more annual borrowing, and the downward spiral continues. So low interest rates support more borrowing by the Federal government. This is the last comment I will be making on this because I erred in talking about unemployed people with little money to spend being a factor in the tepid economy, which in turn is one reason for a roughly 16% drop in carloads over the last two years. I should have realized that it would quickly turn in to a political discourse, and on this forum I would rather spend my time discussing railroad topics than politics. So as for this thread, I am out and others can take it where they wish to go.
Low interest rates make it easier for the Federal Government to sell more debt - borrow more - because the payments are lower. On $20 trillion in outstanding Federal debt which is growing by $400-$500 billion annually, if the 10 year Treasury ever returns to historical levels of 5% or so, the annual Federal deficit will balloon by hundreds of billions of dollars more than than it currently is. That is because the new debt will come on at a higher interest rate plus any outstanding debt that is reaching maturity has to be rolled over at a higher rate.
That then will cause an even bigger annual Federal deficit requiring even more annual borrowing, and the downward spiral continues.
So low interest rates support more borrowing by the Federal government.
This is the last comment I will be making on this because I erred in talking about unemployed people with little money to spend being a factor in the tepid economy, which in turn is one reason for a roughly 16% drop in carloads over the last two years. I should have realized that it would quickly turn in to a political discourse, and on this forum I would rather spend my time discussing railroad topics than politics.
So as for this thread, I am out and others can take it where they wish to go.
While the Feds set some interest rates, their T bills/bonds are set by market rates, so I can't see how your arguement applies. Nevertheless, since you don't wish to comment any more, I also don't wish to belabor the point any further. I would also rather spend my time on railfan stuff.
The Brexit thing possibly could damage our economy, too.
http://www.nytimes.com/images/2016/06/25/nytfrontpage/scan.pdf
kgbw49This is the last comment I will be making on this because I erred in talking about unemployed people with little money to spend being a factor in the tepid economy, which in turn is one reason for a roughly 16% drop in carloads over the last two years. I should have realized that it would quickly turn in to a political discourse, and on this forum I would rather spend my time discussing railroad topics than politics.
JBS1 and myself pointed out with actual facts the reasons for both a drop in carloadings and the decline in participation in the labor force. That was not political. You simply waltzed in repeating a false talk radio meme.
C&NW, CA&E, MILW, CGW and IC fan
Through the end of week 24, 2016 vs. 2015, as per the Weekly Carloads and Intermodal Traffic Report, UP carloads declined 290,160, of which 205,504 or 70.8 per cent were due to a reduction in coal loadings.
The other large declines in car loadings - more than 10,000 cars - were crushed stone, gravel & sand, chemicals, and petroleum. Together they along with coal accounted for 96.5 per cent of the decline, some of which was offset by samall increases in a few categories, i.e. coke and non-metallic metals.
The biggest factor leading to the decline in coal shipments appears to be the switch by electric power generators from coal to natural gas, because of its price advantage, and renewables.
Rio Grande Valley, CFI,CFII
kgbw49 ... artificially low interest rates are designed to both subsidize the large annual Federal deficit spending ... Labor force participation - the percent of working age able-bodied workers who should be working, is at historic lows again...
... artificially low interest rates are designed to both subsidize the large annual Federal deficit spending ...
Labor force participation - the percent of working age able-bodied workers who should be working, is at historic lows again...
How does low interest rates subsidize the federal deficit? It makes T bills less attractive, and inflation would make it easier to pay off the debt with dollars that are not worth as much.
Part of the labor force shrinkage is due to the afordable care act, where couples who both worked to qualify for employee health insurance, are now free to leave one spouse at home to care for the family.
I have been volunteering as Treasurer and Board Member for one of the largest food shelves in the state I live in since 2008. Our usage has tripled and a lot of that increase has been those early retiree baby boomers - mainly white collar - getting laid off and not being able to find another job. They burn through their 99 weeks, then their 401k and then hace nowhere else to go. It is matter of perspective, and that is one story from the front lines. People are being left behind.
kgbw49Labor force participation - the percent of working age able-bodied workers who should be working, is at historic lows again. At 62.6%, we are close to 2 out of 5 able-bodied workers not working.
Hardly and a very misleading number the rightist media loves to quote. According to the BLS, before Oct. 1977 is was lower, eg., in 1954, it was 58.1%. The peak was 1997-early 2001 (during the Clinton years) often above 67%, with an all-time high of 67% Jan. 2000. Much of the drop is the early retirement of baby-boomers and people returning to school for retraining. The CBO says that roughly half of the three-percentage-point decline in labor-force participation since the end of 2007 is due to the aging of the workforce. article
herdebu On a recent vacation we drove from Salt Lake City UT to Reno NV sure didn't see much traffic. From Elko NV to Reno we were skunked couldn't believe it was the UP thought they would be running one right behind the other. It was mid-day so could have been caused by track blocks. On the return did see traffic East of Winnemucca NV. Which route does Amtrak take into Reno from Winnemucca?
On a recent vacation we drove from Salt Lake City UT to Reno NV sure didn't see much traffic. From Elko NV to Reno we were skunked couldn't believe it was the UP thought they would be running one right behind the other. It was mid-day so could have been caused by track blocks. On the return did see traffic East of Winnemucca NV. Which route does Amtrak take into Reno from Winnemucca?
Johnny
Yes, GDP seems to be trending down. Manufacturing is very slow right now.
Overall US rail traffic thriugh the first 24 weeks of 2016 is down 8% from 2015 levels.
http://www.railwayage.com/index.php/freight/class-i/grain-gain-helps-offset-coal-and-crude-crash.html?channel=50
But 2015 traffic is down from 2014. On UP, 7 day carloadings ran 188,000 weekly in 2014 and dropped to 177,000 in 2015. They are running at about 160,000 so far in 2016. See slide 3 of 9 in the attached UP presentation.
http://www.up.com/cs/groups/public/@uprr/@investor/documents/investordocuments/pdf_up_citi_slides.pdf
Major parts of the economy are in recession but it is not shown on Wall Street because artificially low interest rates are designed to both subsidize the large annual Federal deficit spending and drive investors to the stock market out of a desperate need to get a modest return, which buttresses the Dow Jones Industrial Average.
And the unemployment rate does not show it and keeps dropping because they stop counting discouraged workers who have needed a job but have given up to looking.
Labor force participation - the percent of working age able-bodied workers who should be working, is at historic lows again. At 62.6%, we are close to 2 out of 5 able-bodied workers not working.
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