Chart of the day: Public vs. private US debt to GDP ratios
from Steve Keen
Separating out private sector and public sector debt in the USA
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—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
Interesting but could be misleading.
It is important to separate the household debt from non-financial et financial enterprises debt.
Jacques Sapir
Professor
EHESS-Paris
Agreed
i disagree with the above: this is much about american economic bs the private sector as identified by conservatives is clearly out of control (in a statistical sense) while public debt is up, but clearly not as badly as ‘private’ … the private sector debt the private sector debt repeat that over and over it is the only way to counter Rush and the right wing-nuts.
Charlie, The best way to blow “the right wing nuts” out of the water is with the whole truth. Until respectable “economists” start telling the whole story (of how Plutonomy is played).
Even outsiders like Gillian Tett or an archaic green heretic like E.F. Schumacher give a better account of the nature of the game and the strategy of the central players.
The video documentaries, The Secrets of Oz (via Youtube) and Moving Forward or even Thrive may be short on realistic solutions, but give fairly extensive coverage of The Problem and its corporate sponsors. Maybe it will be useful to engage in a little extra-curricular group review and collaborative RWE capable of stomping the competition (figuratively speaking).
Honestly, it seems pretty obvious that until RW economics starts overpowering Faux News plutonomics with potent doses of economic reality as a whole — from the foundation up, core issues, messy details, and all — including the systemic corruption & collusion perverting the system, etc.
Who knows…? RW economists might wind up being hailed as global heroes.
And, hey, what about our GDH (General Domestic Happiness)?
Wouldn’t that be better than GDP (Global Demonic Perversion)?
Isn’t it OK to talk about those?
It should be. Most intelligent people know that the elitists & their minions pumped up the Bubble Economy game with their Pump & Dump cycles, fractional reserve banking, and compound interest over the last 100 years plus.
And what about the alternative? Why not start discussing a sustainable replacement or a remedial process, at least?
This is a very important chart and shows the futility of much policy discussion. It was private debt which caused the crisis; it is public debt which is the focus of policy.
While I think Steve Keen’s work is fantastic , I’m afraid he’s missing something that will cause him to smack himself in the forehead in a “How could I have missed that !” moment , much as he did when he was scooped on the “credit impulse” concept.
By focusing so intently on private debt and largely ignoring the public counterpart , he overlooks a dramatic regime change in debt dynamics that occurred around 1980 , and by doing so , fails to highlight the obvious political origins of that change.
Looking at his graph above , from the peak in public debt/gdp ( and corresponding trough in private debt/gdp -) at ~1945 , public and private debt/gdp were almost exactly offsetting until ~1980 , then both began moving higher in the new “regime” , with only brief periods when they were even close to offsetting each other as they had in the prior 35 years.
Steve acknowledges that public debt increases since the crises began have moderated the the damage to the economies of the U.S and Australia that are expected from private sector deleveraging , so he understands the equivalence at some level. Surely he must also recognize that governments often transfer private debts to public balance sheets during crises as well. So why , given this understanding , does he not incorporate gov’t debt into his models , and , in fact , seems to go out of his way to criticize those that do ?
Steve constantly points out that the private debt bubble , and all our troubles , started just after WW II , using the close fit to an exponential growth curve to illustrate the point. If he looked at combined public and private debt instead , he’d see that the trouble really began a few decades later , and we’d be more likely to see how we went wrong because we’d know when we went wrong.
When it comes down to it, all debt is private. We all owe it no matter what you want to call it. Either way it’s out of control.
It all begins with Reagan, the ending of private pensions schemes, the curtailment of health care for employees in private firms, and, with the curtainment of income and benefits for the middle classes, the explosion of private debt, the financial crisis, the economic downturn and job disappearance. None of this is discussed in the Presidential debates.
with our current system debt can not be avoided and will continue to rise. money is created out of debt by paying off debt money is destroyed. research the history of money to understand this ridiculous system our government (and most nations) has adopted.
this is misleading if you are trying to compare public debt vs. private debt. PUBLIC ANNUAL INCOME IS 12 TRILLION OR SO FOR 2012. our govt.tax revenue is about 2.5 trillion with a trillion dollar shortfall. you would have to multiply the public debt by 5 to equally compare the debt.
The quick red wolf jumped over the lazy dog