Monday, January 9, 2017

You don't even know the size of inflation-adjusted debt until you get the calculation right

I keep going back to this graph:

Graph #1: Federal Debt by President, from Washington to Obama
You can click the graph to see it bigger and more readable. You probably don't need to, as the plotted line is easy enough to see. Also you may not want to, if your closed mind has already dismissed my topic as meaningless and unimportant. Me, I'm still trying to figure out what my topic is.

I keep going back to that graph because it shows debt adjusted for inflation. I wonder why they bother. They're not looking at debt relative to anything but the price level. All they are showing is that debt went up more than prices went up. It's an odd focus, don't you think?

Oh, I forgot to say: The graph is from Reddit, from the The_Donald subreddit, from a page titled A look at our national debt (adjusted for inflation) since George Washington became President in 1789. Obama will have added almost $9 trillion to our national debt by the time Trump takes office. It has 4082 thumbs up and 442 comments.

I searched that page for the phrase adjusted for inflation and found two occurrences: one in the post title, and one in a critical comment by imfineny:

I think it would be more informative to plot it against GDP adjusted for inflation

Mm. I wonder what sort of information the guy expects to find in the graph he imagines. (I briefly wonder why he doesn't just create the graph that he wants to see. I guess he doesn't want it that much.)

If the adjustment of debt for inflation is done using the same calculation used to adjust GDP for inflation -- as it almost always is -- then the debt-to-GDP ratio comes out the same whether the values are adjusted for inflation or not. It is incorrect to use the same calculation for debt as for GDP, of course. But I doubt those guys at Reddit are aware of that problem.

If they were, I expect they would focus more on getting the calculation right than on the size of the debt. Because you don't even know the size of the debt until you get the calculation right.

And now we have discovered my topic.

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