Wednesday, September 17, 2014

Not perfect, but it's close.

The red line on this graph shows Real GDP, percent change in Real GDP, actually, shifted down one and a half percentage points:

Suppose you wanted to draw a trend line through the red line, a smoothed, gradually sloping line that provides some idea of how the "average" value of Real GDP had changed over time.

I think it would look a lot like the blue line on the graph.

The blue line is a measure of nominal GDP relative to total credit market debt. The downtrend in real economic growth looks like a result of accumulating debt.

1 comment:

The Arthurian said...

This is conceptual economics. I am not arguing in support of an idea. I am trying to convey an idea. Thus I do not say the decline of growth "is" a result of accumulating debt. I say that's how it "looks".

I am still looking for a simple graph that actually shows the idea this graph only conveys.