Tyrannosaurus Debt Climbs the Charts

In honor of the stimulus package's ascent into policy, here's a chilling chart showing that the ratio of total credit market debt vs. gross domestic product was a shade under 350 percent in at the end of the first quarter of 2008: UPDATE: I was asked to kill the chart, which showed the debt ratio for the total credit market in the U.S., consumer, business and government, in relationship to GDP, by the firm whose name is on it, Ned Davis Research. That firm's marketing group said it could not verify the chart.

It was cited to, Ned Davis Research, a quantitative analysis firm, but there are plenty of similar charts on the Web. UPDATE: in fact, there are not many similar charts of this particular measure. But you can find it here. Data from the Federal Reserve suggests that the ratio is accurate.] I liked this one because you can see the spike during the Great Depression, as Roosevelt tried to stimulate the economy, and the relative drop after the Korean War, followed by the slow build-up during Vietnam, then the rapid expansion during Ronald Reagan's second term, as he boosted defense spending in his ultimately successful effort to break the Soviet Union. You can see it level off a bit during the First Bush and the Clinton Administrations, helped along by the Internet Bubble's inflation of GDP. And then you see it zoom up again during the Bush years, fueled by tax cuts and spending on the Iraq war.

Of course, that chart is now outdated -- the end of March brought the end of Bear Stearns, but the wheels didn't fall off the economy until September. I am looking for a chart that shows what the stimulus package, which is larger than our spending on Iraq, might do to this ratio. When I find it, I'll post it (maybe I'll create a Big Post t-shirt to give to the first reader who submits one).

At The crisis explained in one chart, an impassioned discussion of why our choices are to: pay it down, default on it, or inflate it away.

History certainly suggests the debt is unlikely to be paid off. The U.S. has always been a debtor nation, argues Steve McGourty in this lengthy post, U.S. National Debt. McGourty, a technology guy with an economics avocation, has put together a series of interesting charts, with commentary. He uses historical data to show that not since Andrew Jackson has the U.S. had marked success at reducing its debt. He also shows that in ordinary times, it might be a hopeful sign that a Democrat is president -- since World War II, the debt has increased by about .9 percent less under Democratic presidents than Republican ones. These are not ordinary times.

For now, we can contemplate a remix of the Tyrannosaurus Debt number from School House Rock.