"Decline of a lifetime" follow-up

Following-up on mine of 12 March 2023

 
I have one more graph to show you: my debt-per-dollar graph. It shows dollars of total (public and private) debt, per dollar of money in circulation (M1). Based on the Bicentennial Edition of the Historical Statistics, this old graph runs from 1916 to 1970. It ends with debt already higher in 1970 than it was at the worst of the Great Depression:

Graph #6: Debt per Dollar, 1916-1970

Graph #6 shows just two turning points -- the same two turning points shown by my graph #3 in the previous post; and the same two turning points shown by Philippon's finance graph. The turning points again fall into place, the one at the 1933 bottom of the Great Depression, the other just around 1950. 

With graph #6, as with Philippon's (#4 in the previous post), financial cost goes up when the line goes up. When financial cost goes up, economic growth goes down.

The graph measures credit in use -- money borrowed and not yet repaid -- relative to "just plain" money in the economy. Just plain money, by the way, mostly comes to us as income; this is where we need the increase.

The graph shows that by 1970 the debt-per-dollar ratio was already higher than it was at the bottom of the Great Depression. What it doesn't show is that after 1970 the ratio just kept going up until it created the financial crisis of 2008.