Friday, March 2, 2012

Revenge of the Dodo Bird

Went to FRED, got the numbers on total debt, GDP, and prices during the Great Inflation:

Between 1965 and 1970 when TCMDO/GDP "went down" we see a 44.61% increase in debt, and a 44.40% increase in GDP.

It took a price increase of 22% or 23% to "inflate debt away" enough that GDP grew almost as fast as total debt, over those five years.

Between 1970 and 1980 when TCMDO/GDP "didn't go up" we see a 192% increase in debt and a 168% increase in GDP while prices approximately doubled.

Debt increased 14%+ more than GDP increased during that decade, despite the raging inflation.

Do we really want to do that again? It is what led to Reaganomics.

Is the slow growth of debt really the same as the decline of debt? It is not.


Please note, these are not my claims, that the ratio "went down" before 1970 and that it "didn't go up" after 1970. My claim is that debt always goes up.

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