Saturday, August 13, 2016

What I said eleven months back

Here it is. I finally found my old post from September 2015. Almost a year ago.

I'm gonna chop off the introductory stuff, revise what's left to eliminate references to the introductory stuff, and present it again:
2½ Times Longer and 2½ Times Deeper

Suppose we take the "Household debt service" graph and stretch the X axis a few years into the future. (FRED lets me do that, but when I capture and display the link, it reverts back to 2015.) Anyway, here's a screen shot:

Image #1

Next I change the blue line to dashed red, turn off the recession bars, stretch the graph out to the year 2030 again, and take another screen shot. Then I load it into Paint.NET, use the "magic wand" (at 20% tolerance) to erase the white background, and save the file as a GIF:

Image #2

Then I crop it so it shows just the 1990s, and put a black border on it. Actual size:

Image #3

Then I open up Image #1 so I have two files to work with in Paint.NET. I create a new layer in Image #1.

I switch back to the cropped GIF file, make it twice as big, no, 2½ times as big, and copy it.

Then I switch back to Image #1, paste the enlarged cropped GIF into place, "flatten" and save the file, and show you what I got:

Image #4

See how the first few years of the dotted red overlay follow very much the same path as the blue line after the 2007 peak? This doesn't guarantee that anything will happen tomorrow, of course. But the striking similarity of the two downtrends makes me think that the uptrends might also turn out to be similar.

So we may soon get a few years when the economy seems pretty good again, while debt races upward even faster than it did before the crisis -- if we have the stomach for that. When those good years come, you know whatever political party is in power will claim all the credit.

Right now, though, nobody expects a few good years.

Funny thing. I had to cut off the last sentence. This was the original ending:
Right now, though, nobody expects a few good years.

I don't either.

I didn't expect the good years back in September of 2015, but I do now. So that last sentence had to go.

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