debt to GDP historical data

This log plot shows various items as % of GDP.  Cumulative deficit is near 100%. Gross federal debt is approximately equal to private sector debt (bonds), Gross national debt (blue) is the sum of the two is near cumulative deficit. National defense varies from 50% at the peak (year 1945) to about 4% in year 2005. Surpluses are shown in the log plot and the blanks are deficit years (from 1970 to 1996).  GDP falls after surplus years including after year 1997. Gross federal debt is the sum of private sector debt and government debt (from itself). If bond sales are eliminated (or discontinued) the government can borrow as much as it needs from itself and save unnecessary interest to the private sector. And the national debt would vanish (in a few years)!  After 1971 there is no gold standard and fiat currency is operational and there is no need for bond-financing (except for the unnecessary requirements based on the gold standard). GDP is a constant 100% in the above plot.

Note.—See Note, Table B-78.

Sources: Department of the Treasury and Office of Management and Budget.

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picture from GAO Citizen’s GuideI came across this plot on interest payment projections. The solution to this problem is to avoid borrowing from the private sector because the US government can create money and is not required to borrow anything. Borrowing only helps the wealthy because they get an opportunity to get interest at no risk!

the economy

The diagram shows flows of money in blue and stocks at year end . GDP is the level of money in a holding tank at the end of the year. The government pours money into this tank and a counter keeps track of the outflow. Money flows through household and industrial sectors which exchange money between them and the money flows out to taxes and exports. A counter measures the tax flow which is counted. Money also flows from imports into the GDP tank. The counter readings also refer to conditions at year end.

(Counter_out) – (counter_in) is the deficit in the simple case with no external trade. With trade we add counters to imports and exports. Govt spending and imports feed GDP and taxes and exports remove GDP. In the diagram counters are not shown for imports and exports. The cumulative deficit is merely the number of dollars that accumulate over time, say from year 1800. The annual deficit is the counter reading in an interval of one year.

Social Security etc. are basically counter readings. Note that the flow does not requires taxation stream to go physically into the government pot because money is created by the govt out of nothing. There is no need for a debt ceiling or “living beyond your means” or such concepts which households are constrained by.

Banking operations shuffle money around and do not figure determining GDP.  All private sector savings are due to government deficit flow. If the government decreases the deficit flow every thing will come to a standstill with a big depression. The “deficit mania” and wasting time over “debt ceiling” are basically ignorant propaganda.

The data for the prediction comes from

“When an Excel spreadsheet runs wild | Bill Mitchell – billy blog”  at

http://bilbo.economicoutlook.net/blog/?p=16557&cpage=1#comment-21272

CBO budget produces GDP prediction is in 2005 $billions and  18460  19010  19940  21245 for years 2013,2014, 2015 and  2016
compared to RP GDP prediction: 13950 14315 14490 15250, if the ratio of GDP to Government holds at 5 (which it has from 1969 to 2009). This wold be a loss on the order of 5 trillion dollars. So much for the “deficit crisis mania”. The two plots show the predictions.

These plots show more details. Figure 1 shows the components of GDP, Figure 2 shows the private sector gross vs. government funding and Figure 3 shows GDP vs. govt funding.  Government funding has been increasing all the time but the peak of GDP occurred in 2007, fell in 2008 and 2009 and has risen in 2010. In general the private sector gross is four times government spending. The decrease of GDP may be attributed to the money wasted in wars and due to less employment.

Partha

Three plots are shown in this blog. Here are more plots derived from US Gross Domestic Product data from years 1969 to 2009 available at
http://www.bea.gov/index.htm
plotted in many ways. Figure 1 shows the various components of GDP, Figure 2 shows government spending and GDP keep in step and are roughly proportional to each other. Figure 3 shows that Govt_spending is proportional to the rest of GDP which is the private sector Gross Product. This plot shows that government spending is one quarter of the private sector gross product. In this plot taxes have not been included. If taxes are removed From Government spending, the curves will still remain proportional given that taxes are a small part of government spending. We can conclude that reduction of government funding (the imagined debt crisis) will reduce both GDP and the private sector gross product.

https://pshakkottai.files.wordpress.com/2011/10/gdp-new-plots.docx

is the link to the plots

http://www.gfmag.com/tools/global-database/economic-data/10403-total-debt-to-gdp.html#axzz1ZollYTTS

is the link to the above data.  The data tabulates (cumulative debts/GDP in year 2009), accumulated from year 1980.  In these plots, cumulative government debt, also in the form of the same ratio, is separated from the total debt which is normally discussed as lumped together in mainstream media. This ratio is replotted separating the government debt from other debts.

Deficits

This is figure 1. It is a plot of ‘government debt’ vs. (non_financial_business debt + household debt +financial_business debt). The growing economies which don’t talk about ‘unsustainable_level ‘ debt are seen to define a line near India, Brazil, Italy and Japan. Countries with high unemployment like UK, USA and Spain have low government_debt.

Figure 2, plotted above, is a plot excluding the financial_industry debt. The character of this plot is similar except the debts and deficits are of the same order. Note that government debt in a given year is the source of surplus in the  private sector. The plot shows government debt and private debt keep in step cumulatively. All the cumulative private sector debts have produced cumulative wealth, like houses, factories and other business  enterprises.

Adding financial debt (in figure 1)  makes the plots look more dismal, perhaps, indicating the non-productive feature of the financial industry.