Yesterday's graph was about what it takes to have a healthy, growing economy.
If you take that graph...
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| Graph #1: NonFederal Debt as a Multiple of Federal (blue) and Percent Change of Potential GDP (red) |
... subtract the blue line from the red line...
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| Graph #2: % Change in Potential GDP less the Ratio of Non-Federal to Federal Debt |
... and take the natural log of that...
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| Graph #3: Natural Log of (% Chg in Potential GDP less the Ratio of Non-Federal to Federal Debt) |
... all that remains in the plot window are the very good years -- the "golden age" of the 1950s and '60s, and a bit of the "miracle" years of the 1990s.
Yesterday's graph was about what it takes to have a healthy, growing economy.
2 comments:
Interesting stuff.
Consistent with my idea that the American economy is dying.
Can you explain the rationale for the subtraction in Graph 2?
Cheers!
JzB
"Can you explain the rationale for the subtraction in Graph 2?"
I was thinking, make the debt ratio a zero axis -- a baseline -- and look at Potential GDP growth relative to that baseline.
Sometimes I just do simple arithmetic relations until I see something that looks interesting, and then try to consider whether it has merit.
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