Thursday, November 7, 2013

Checking my facts after spewing them

In mine of 6 November I wrote:

Very little of the Federal debt of 1970 was due to the borrowing of 1970. Most of that debt was from prior years.

Sounds right, doesn't it?

I don't think I ever looked at it though.

So... I can get a post out of that!

If I take FRED's Gross Federal Debt (FYGFD) and look at the increase for one year, 1970 say, that's the deficit for that year. If I look at the total for that year, it's the debt.

If I look at the increase for that year divided by the total for that year, and it's a low number, then I can fairly say "very little of the Federal debt" that year "was due to the borrowing of" that year. Got it?

Also, it might be interesting to see the trend.

Graph #1: Annual Addition to Federal Debt as a Percent of the New Total
Apart from the World War Two years, the Federal deficits have for the most part been less than 10% of the accumulated Federal debt. I think it's fair to say: that's a low number. At least, it means that the common, incorrect inflation adjustment of debt has the calculation right for only about 10% of accumulated debt, and it miscalculates the other 90 percent.

Regarding the trend, note that the increasing size of the deficits (again, apart from WWII) occurs mostly in the 1970s (and after 2000); and that the 1980s shows a trend of decreasing size. Again, this contradicts the notion that the deficit exploded under Reagan.


Jerry said...

I don't know ... i think your graph (and , and ) shows that the deficit during 1980-1992 is generally higher than the period before or after. Maybe "exploded" is a hyperbolic term, but, it's clearly bigger during that time.

The Arthurian said...

my objective in general on this blog is to show that debt is the problem.

and in particular for this post, to show that the growth of debt started well before Reagan.

i am confronted by people and by inflation-adjusted debt graphs that say the explosion of debt started with Reagan.

"Started with Reagan" is a view that, if correct, would undermine my position on debt. Therefore I must evaluate it.

the graph clearly (i think) shows the trend is UP until 1983-84 and DOWN thereafter, until 2000.

i do not deny there was a lot of debt under reagan. it would be foolish to do so.

nor do i deny that the problem began long before 1980.

The Arthurian said...

note that the increasing size of deficits (1966-1983 or so) corresponds remarkably well with the dates of the Great Inflation.

Thus the increasing size of deficit relative to debt may be due to inflation driving prices up. In a way, this makes good sense. It also reinforces my view that the increasing size began well before 1980.

in order to say more, one would have to inflation adjust the deficits... but Jazz (for one) can see no purpose in that

Jazzbumpa said...

Any way you slice it, Federal Debt exploded under Reagan. Your graph clearly shows that. The late 70's were falling rapidly from the mid-70's peak. Then Reagan-Bush I had values >= 10% the entire 3 terms. The big drop came with Clinton.

Except for the Clinton flattening, it's been exploding since. But the Reagan admin is clearly different from what went before.

Gross Debt

Here's Public debt as % of GDP. Note that pre-Reagan this was going down. And per GDP is the correct context.

Here is YoY % change of same. Only Reagan and Bush I went significantly over 5% until the GR, which was a quick, specific blip. Note also that Reagan - Bush I were consistently over 2.5%. Even Bush II didn't do that. until the GR

"Started with Reagan" is a view that, if correct, would undermine my position on debt. Therefore I must evaluate it.

There has been persistent federal debt since around 1840, so it's nothing new. But Reagan was clearly and undeniably different. He was the first pres to act as if deficits don't matter. Bush II, I mean Cheney, was the only other one to do so.

Keep evaluating.


Jazzbumpa said...

Messed up my third link.

Here it is.