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I always enjoy going to zerohedge for the most intelligent, compelling, and engaging iteration of the sociopathic perspective on events. I was disappointed, however, to see Tyler Durden submit this guest post from Bill Buckler, who is apparently of this publication. Anyway, in the course of writing some positive things about Ron Paul, Buckler writes:
The root of the problem is perfectly illustrated in the fact that since August 1971, the funded debt of the US government has risen from $US 400 Billion to $US 15,236 Billion. The severity of the problem is illustrated by the fact that with Mr Obama having yet to complete his third full year as President, he has presided over $US 4,600 Billion (or almost one-third) of that increase. The root of the problem is the abandonment of money – the final legal connection between Gold and the US Dollar was ended in August 1971. The severity of the problem is the grotesque expansion of what has taken its place.
Of course this is a giant stink bomb of the “correlation
equals causation” fallacy. But beyond that this is a comparison equivalent to comparing apples to zebras. This may be painfully obvious to most people, but let’s examine some other things that happened between 1971 and the present.
Firstly, we went from having 200mm people to 300mm. Secondly, NGDP went from $1.1 trillion to $14.6 trillion. And lest hard-money types wave that all away as ruinous inflation, the Inflation Calculator says that $1 in 1971 is equivalent to $5.32 today, which if you take it purely at face leaves today’s RGDP relative to 1971 at $2.7 trillion, a nearly three-old increase even though population increased 50%, leaving per-capita GDP much higher, which can be confirmed by looking at all kinds of measurements of quality of life in the United States over the last 40 years and seeing them all rise. So we are a much wealthier country now than we have been, and we have experienced a decent amount of inflation, so it makes no sense whatsoever to just throw up the nominal gross national debt numbers from 1971 and today and call it “the root of the problem.”
And look – the debt-to-GDP ratio, which is a very useful measurement since it complete controls for any nominal growth that isn’t reflected in real standards, has tripled! In 1971 it was below 40%, now it’s over 100%! If you wanted to push the idea that we are dangerously indebted (we aren’t, but if you did), that’s all you have to say. You don’t have to make grossly misleading comparisons to prove that point.
FWIW, I’m not even mentioning how deeply unfair this is specifically to the President, who was handed a $500b structural deficit and an economic implosion worthy of the Great Depression by his successor. I’m not sure it’s really possible to stabilize debt-to-GDP in those conditions unless you unilaterally abolish most government functions.