There has been a bunch of reposts of three charts showing the relative deficits and spending increases from Both President Obama and President Bush. While this gives great fodder for the let’s bash each other and show just how bad the other guys were crowd, the charts themselves are a waste of ink and lung power to debate.
While the charts, are interesting, and like most statistics represent the adage that,
“there are lies, damn lies and statistics”
popularized by Mark Twain and originally a quote from Benjamin Disraeli; they are irrelevant to the bigger problem. While we can argue about one president solving the budget problem and the other one making it worse, all were relying on the underlying bad economic engine to make it all right.
Those who have read my posts on the subject, know I believe there is a deeper problem. The massive increase in currency since 1972, which in my opinion has given rise to a national crisis of false and inflated values and costs for subsidized programs, health care costs and housing I believe, is the real problem. Perhaps, it is our own underlying valuation of our economy and our assets that are the problem?
Since we all seem to like charts, I will pose my own here. I am not posting this to assign blame, we have way too much of that going around. Nor, am I saying this is an infallible calculation – as I myself am not sure. I will leave it to others to wrangle with that debate. I am posting it to have you see what I saw as I was studying the rising costs of health care and started looking at other segments of the economy. I have a number of charts that will appear in my book. In the meantime here is the one that started me thinking.
This chart is relatively simple. It is the M3 (the total money supply calculated by the Fed) from 1900 up to 2010. From 2006 on the Federal Reserve decided to no longer report the M3, the M3 then had to be estimated. There are a number of different estimates, their only variance is the shape of the curve after 2007. And they don’t make much difference in the current problems.
There was about $500 billion in currency in 1972. Today estimates put that number at somewhere between $10 trillion and $15 trillion. What doesn’t change much regardless of the trend, forecast or growth calculation you apply is what the projected economy would be if we had remained on the trend-line as it was prior to 1972. This line will project about $3 trillion on the baseline economy for today – assuming we had continued on the Gold Standard. If you factor in the gains we would still likely have had in the technical sectors as a result of the investment in NASA, the curve shows additional growth to somewhere between $5 and 6 trillion. This is still a far cry from the unbelievable 20 to 30 times we have multiplied the economy during this period. Remember, “lies, damn lies and statistics!” I hope you treat this projection with the same scrutiny as all the others!
I am simply suggesting that we need to look deeply at this issue and diligently consider it’s effects if this supposition is even remotely correct!