Friday, November 25, 2016

It was all over but the funeral when the red went above the blue

Graph #1: Growth of Financial (red) and NonFinancial (blue) Business Debt, relative to GDP

That's when it was all over. But when did the trouble start? The next graph shows the blue relative to the red:

Graph #2
The blue line here is the blue (from Graph #1) relative to the red (from Graph #1).
The red line here is a Hodrick-Prescott, showing decline since the beginning.
If you look again, you might see an uptrend in the early 1960s which appears in the Hodrick-Prescott as a brief flattening. If I started the H-P in 1960 it would start with an uptrend.

Graph #3
The ratio doesn't always have to trend downward.
The early 1960s were pretty good, by the way. Also, the latter '90s.

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