Evidence vs evidence

In on the cost of private debt a few days back, I quoted from a 2012 comment by Vivian Darkbloom but had trouble with Darkbloom's link to a 2010 post by Steve Keen. Keen's graphs don't show up.

Contrary to what I said in that post, I think this may be the graph Vivian linked:

It shows debt and GDP separately, not as the ratio I imagined.

In response to Vivian, Scott Sumner replied:

Vivian, Thanks for that graph. Here’s my prediction: 99% of people will misread that graph. Most will think it shows a debt bubble before the Great Depression. In fact it shows there was no debt bubble before the Depression.

I think that might be the graph they were looking at, because the red line shows pretty dramatic increase from around 1922 to the Great Depression. Looks like a bubble to me. Also because Keen's caption for the graph is

Figure 1: Debt and GDP 1920–1940

and he says

Fig­ure 1 shows the scale of debt dur­ing the 1920s and 1930s, ver­sus the level of nom­i­nal GDP.

At Darkbloom's graphless link, for comparison, I find the caption

Fig­ure 7: US Pri­vate Debt and Nom­i­nal GDP, 1920–1940

and of this (missing) figure Keen says

Fig­ure 7 illus­trates both the ris­ing debt of the 1920s and the falling debt of the 1930s.

By Keen's descriptions, and Vivian's "a somewhat longer time-frame (back to 1920)" remark, the two figures could easily present the same graph.

The Point of this Post

Keen offers Figure 7 as evidence that

both the boom of the 1920s and the slump of the Great Depres­sion were caused by chang­ing lev­els of debt in an econ­omy that had become fun­da­men­tally spec­u­la­tive in nature. Ris­ing debt used to finance spec­u­la­tion dur­ing the 1920s made that decade “The Roar­ing Twen­ties”, while pri­vate sec­tor delever­ag­ing when the spec­u­la­tive bub­ble burst caused a col­lapse in aggre­gate demand that ush­ered in the Great Depres­sion in the 1930s.

The economy "had become fun­da­men­tally spec­u­la­tive in nature", Keen says, and "debt [was] used to finance spec­u­la­tion dur­ing the 1920s". He also says "the spec­u­la­tive bub­ble burst", leading to the Great Depression. Keen sees a bubble before the Great Depression.

Scott Sumner, on the other hand, says of the graph that

Most [people] will think it shows a debt bubble before the Great Depression. In fact it shows there was no debt bubble before the Depression.

Sumner's evidence is that he calls his opinion a fact.