Sunday, July 31, 2011

Japan versus USA (2)

The graphs from yesterday show GDP, total debt, and M1 money for the US and for Japan. I wanted to improve the comparison by putting GDP for the US and Japan together on one graph, total debt together on another, and M1 money together on a third. So that's what this post shows.

Ends up, I'm not very satisfied with how this post turned out. Thought about deleting it. Decided it might be useful to show that these comparisons are not satisfactory. But then, maybe you'll like'em.

GDP Comparison

The numbers on the vertical axis don't mean a lot. The units are "dollars divided by yen". And the GDP numbers are nominal, so inflation has a role in the trend as well. So, for what it's worth:

Where the trend shows flat, as from 1980 to 1991, the gist of it is that GDP growth in the U.S. and Japan was roughly equal. Where there is increase, the suggestion is that U.S. GDP was increasing more, or Japan's GDP was increasing less.

The two economies were growing roughly apace until 1991, when the U.S. economy started gaining on Japan's. As has been well documented, Japan's economic growth came to a sudden halt around that time.

Total Debt Comparison

Again, don't read too much into the vertical-scale numbers. But you can see from the flat trend (until 1990) that total debt in the two countries was increasing at about the same rate. As with GDP. And as with GDP, after 1990 total debt in the U.S. started growing consistently faster than in Japan. Again, it is because of the slowdown in Japan.

The last two bars on the right in this graph are again about the same height. If that pattern continues and becomes a trend, it will be because total debt in the two countries is again growing at about the same pace. Or, perhaps I should say, *not* growing.

M1 Money Comparison

More variations in the trend here. This graph is not so easy to read. For context, look again at the three trend-lines: Total debt, M1 money, and GDP for Japan, 1980-2009:

Things were "normal" in Japan until the late 1980s when the pace of debt growth suddenly slowed. Then GDP flatlined, and then the quantity of money began abnormal increase. That abnormal increase is reflected on the bar graph above, as a decline since the mid 1990s. At that point, Japan's M1 money started growing significantly faster than U.S. M1 money.

1 comment:

Jazzbumpa said...

Try comparing GDP/Capita. That doesn't help with the exchange rate issue, though.

For the second graph, try debt/GDP. This gets rid of exchange rate issues, and presents debt in a sensible context.