Picture the Federal Debt.


nethosting" The "national debt" has been pictured in many different ways: a stack of dollar bills to the moon, or what ever. Ross Perot has charts of an exponentially rising debt, but other have pointed out that relative to our ability to pay, the debt is now lower than in 1950.

Here is a graph of three ways to view it.


The BLUE line is the Ross Perot chart. Current Dollars are the actual dollars at any given time: 1950 dollars for 1950, etc. This makes the current debt look very bad: much greater than at any time in US history (or at least since 1940), and rising rapidly by over 100 billion dollars per year.
The GREEN line corrects the dollars for inflation using the Consumer Price Index (CPI). All these are in 1992 dollars. This may overcorrect the effect of inflation (see Inflation and the Federal Reserve), and it shows the current debt rising. Still bad, but not as bad as the blue line. This could be corrected farther by dividing it by population to make it "constant dollars per person", etc.
The RED line is the debt divided by GNP: that is relative to the size of the economy. The units are not dollars but years. 100% corresponds to being one year in debt, rather like if you had a debt equal to one year's income. 50% is 6 months, etc. Looked at this way, the US debt is much lower now than after World War II, and is level or falling.
If you want to make most of the growth in the debt since 1970 appear to be due to inflation, look at it in 1950 dollars
Which is the "correct" picture? Which ever suits your purpose!
(See The USE of STATISTICS).
Thanks to Mason Clark for this graphic. Also see US Debt History since 1792from Steve Conover
Remember, to return to my web page go BACK one more time. Or Return

This page hosted by GeoCities Get your own Free Home Page