Forget about Sumner

Rummaging thru my old posts this morning I noticed a pretty neat graph of debt growth, then moved on. An hour later I noticed myself quoting Scott Sumner:

Krugman makes the basic mistake of just looking at time series evidence, and only two data points: US growth before and after 1980. Growth has been slower, but that’s true almost everywhere.

Sumner disputes the significance of Krugman's statement. But he agrees that US economic growth has been slower since 1980. When I saw that, the bell went off in my head again. Backtracking, I was lucky enough to find the graph I saw earlier:

Breaking the 54-year period into two equal parts --

Total (Public and Private) Debt relative to GDP

A 25% increase in the first period, and a 100% increase in the second period. Debt grew four times as fast in the more recent period. Relative to GDP.

Maybe it was the growth of debt that caused the slowing of economic growth.

Nah. Sumner says forget about debt.