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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Little Joe who wrote (102752)4/18/2009 3:59:56 PM
From: benwood4 Recommendations  Read Replies (1) of 110194
 
LJ, that chart was a % of GDP. Therefore, an exponential view is not appropriate.

e.g. if it is YOUR family situation, if you make 10k per year in 1970, then your debt would be 12k (120%).

NOW, if you make 50k, your debt would be 175k (350%).

That's the information being conveyed -- it's relative to the GDP, which itself is exaggerated by hedonic adjustments. But by portraying debt in terms of overall income (GDP), then the burden is more comprehensible.

If that chart was my personal balance sheet charted over time, I'd be declaring bankruptcy right now. It's a trend that no nation or empire has sustained without serious consequences.

The fact that it shows the GOP escalating the relative debt load dramatically but not the Democrats (since Nixon) should be something that GOP supporters thought about a bit. Mises.org has written about this topic -- tax and spend versus tax cut and spend.

Obama I think will break with this 36 year trend. Coming into office with a banking meltdown, 500k+ jobs lost per month, and rapidly escalating bankruptcies isn't exactly a level playing field with how Bush, Clinton, G Bush, nor Reagan came into power. And the diminished level of production in the US (manufacturing) is at a relative level probably not seen in 80 or 90 years.
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