The core concept of Arthurian economics is that the cost of interest -- the factor cost of money, to put it in terms Adam Smith might use today -- consumes so much out of wages and profits that our economy just doesn't work any more.
From Ouch, yuck, gasp, thud:
After World War II, the Federal debt was large compared to private debt. Private debt was small and did not interfere with growth. So the economy grew. And over the next 40 years, private sector debt grew until the cost of it started to interfere with growth. Since then, economic growth has not been good... except briefly, in the late 1990s.
From Another Piece of the Puzzle, regarding the 1990s:
So we have a decline in credit-use, and an increase in the quantity of money. And after 3 or 4 years of that, we get a "golden" decade. Coincidence? Not in my book.
From a comment:
We have to change the policies that cause us to use credit for money. Most important, we need policies that accelerate the repayment of debt. After that, everything else falls into place. The Fed can be less restrictive without creating inflation, because the repayment of debt is an anti-inflation policy.
From Red Shift:
Here is what I know to be true:
The quantity of money reached a peak in 1946 and has been falling since. The volume of debt pyramided on money hit bottom in 1947 and has been rising since.
Got the picture? Not enough money and too much debt is the kiss of death. If you want to prevent money from creating problems in your economy, you have to have enough money and not a lot of debt.
Now, here's the situation in the U.S. and China:
The numbers are from the CIA World Factbook, taken 14 April 2012. As tabulated in my 3AM post.
Google Docs spreadsheet available.