Wednesday, 18 April 2012

Back to 1918 for Abbott, Hockey and Robb

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The senior members of the Opposition in Australia, namely Leader Tony Abbott, Shadow Treasurer Joe Hockey and Finance Spokesperson Andrew Robb frequently froth at the mouth with rabid delirium each time the issue of government debt is discussed.

For the record, the current estimates show that that net government debt will peak at just under 9% of GDP this year and as the Budget returns to surplus, it will start to fall.

Every economically literate person and many others know full well that this level of government debt is very low when set against any international or historical benchmark.

Which lead me to look at the Niall Ferguson data base which has more than 200 years of historical data on government debt in the United States.

I went back in the data base to see the last time that the US had net Federal government debt equal to 9% of GDP.

It took a while, but finally I found out that the last time the US Government debt to GDP ratio was in 1918.

And it seems that since then, the US economy has done pretty well, even though 94 straight years and counting, the government next debt to GDP ratio was more than 9%.

I wonder what Abbott, Hockey and Robb think of that?  


  1. Ask Bananaby Joyce about this. He's constantly rabbiting on (mindlessly) about 'gross government debt' on Twitter. Talk about an economic illiterate. And yet the Noalition had him as shadow finance minister.

    That speaks volumes.

  2. Have you read this?