Elizabeth Barrette (ysabetwordsmith) wrote,
Elizabeth Barrette
ysabetwordsmith
  • Mood: busy

Shipping Is Stalled

Here is a very astute look at an obscure but vital economic sign: shipping.  When the economy cycles properly, ships spend a lot of time in transit carrying raw materials and finished goods.  When the economy drops, demand falls, and shipping falls with it.  Now the demand is so low that ships sit in harbor because sending them out would lose money.  This is a bad sign.  It is, however, quite predictable that if people have not got enough to live on, they stop buying things.

It's not that there is no money in the economy.  It's that so much of it is held by so few people, there isn't enough left to sustain the motion.  The cycle grinds to a halt.  The whole point of having money is to move goods and services more efficiently than barter.  This only works if the money is spread around enough for people to use it.  If they can't get it, then it might as well not exist.  People have to fall back on other methods of meeting their needs, and the big engines of commerce just run out of gas.
Tags: economics, news
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  • 4 comments
rhodielady_47

rhodielady_47

January 13 2016, 02:32:18 UTC 5 years ago Edited:  January 13 2016, 02:55:27 UTC

Look, I'm not the sharpest pencil in the box, but every time I go stores to shop, I see them putting out NEW MERCHANDISE--merchandise that mostly says "made in China" on it.

As for the people with the money to invest, perhaps they aren't doing it for a reason. A reason like why should they when the banks aren't paying any interest at all on the money people have in the banks.
Our local bank is paying one tenth of one percent interest on savings accounts. WHY would anyone with good sense invest their money in a savings account when they might manage to make a lot more than that elsewhere?
And the reason why banks are paying so little interest? It's because the US Govt. is holding interest rates abnormally low and has done so now for well over a decade now.

If the interest rate was allowed to go up to say 6-8%, we'd be seeing money coming out from under every mattress in the US and, within a year, we'd be seeing an economic boom thanks to all the new investments being made in business.
The way I see it, the US Govt is what's causing our economic woes right now.
The question I'd like answered is WHY is the US Govt. keeping the interest rate so abnormally low?
:^\

EDIT:
According to this article:
http://www.forbes.com/sites/timworstall/2015/11/20/dont-abandon-ship-what-matters-is-why-the-baltic-dry-index-is-falling/#2715e4857a0b26bf70d84cd0

It seems that there is a valid and simple reason why shipping is "down". According to Forbes' article shipping is probably down due to an over-abundance of ships.

I'm more than slightly miffed though!
How is it that I've never heard of this "Baltic Dry Index" before now? I took Economics back in college and I never heard word one about it.

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I'm glad you brought all of this to our attention. It's something we all need to know about.
:^)