I don't accept their explanation, but I do like their graph:
One of the things you can do with total debt is break it into its public and private components. Guess what we're doing today.
I went back to Steve Keen's estimate for US debt that extends back to 1834, converted his monthly data to annual, and compared the public to private:
|Graph #2: Public 9blue) and Private (red) Debt relative to GDP, 1834-2011|
This time around, though, the trend line doesn't yet show private debt falling. Maybe if I added in the years after 2011 we would see it. But even if that's true there's a long way to go, if the plan is for private to fall and public to rise until they meet.
In the meanwhile, consider what these two graphs tell us. At the end of the scale where we are not reading much into the graphs, we can say
1. There is an inverse relation between "total debt to GDP" and GDP growth, and
2. There is a repeating pattern in the relation between the public and private components of total debt,
I'm gonna go now and think about that for a while.
The Excel file