The Dems Pour the Gasoline and Light the Match

More than 8 years ago I wrote a post about corrections made to the infamous Reinhart and Rogoff paper. What? You don’t remember the infamous Reinhart and Rogoff paper?

Let me jog your memory with an excerpt from my old post.

I’m sure you all remember the paper by a pair of Harvard University professors saying that a public debt level of 90% of GDP would significantly suppress GDP growth. Well, a team from UMass/Amherst has pointed out that Reinhart and Rogoff made mistakes in their analysis, excluding data from several countries.

UMass/Amherst made a corrected version of their key chart, which I’ve reproduced below:

As pointed out so long ago, the correlation isn’t as dramatic as first published, but it still looks menacing to me.

I took the liberty of adding some data points to the graph (Red triangles! How I missed you!): the points represent the United States’ experience from 2010 to 2019 (data obtained from the St Louis Fed). As you can see, we’re certainly not raising the curve.

But why is this relevant today?

Well, the Senate passed the $3.5 trillion mythically-funded liberal wet dream package today, which will undoubtedly push us farther to the right on that graph. We’re actually currently at 127%, BTW, so we’re going to get pushed rightward from that absurd value.. Only a handful of countries had higher levels of debt over the 53-year period considered in the studies.

As I pointed out a few months ago, we used to have the fantasy that we could retire the debt if we practiced fiscal responsibility for, say, 50 years. But at our current debt levels we will never pay off that debt. In fact, we’ll never shrink it to any appreciable degree. Especially with crippled economic growth.

We’ve chosen the form of our destructor.