Graph #1: Total Public Debt as a Percent of GDP

Graph #2: Gross Federal Debt as a Percent of GDP

Graph #3: Annual Change in Gross Federal Debt, billions

Graph #4: Nominal (blue) and Inflation-Adjusted (red) Annual Changes in

Gross Federal Debt.

Graph #5: Nominal (blue) and Inflation Adjusted (red) Gross Federal Debt as Percent of GDP

You can view or download the Excel file from Google Drive

The red line is the inflation-adjusted version of the blue, except it starts out falsely low.

Yesterday we were looking at this graph, the same that Noah showed:I want to use this graph instead:It goes way more back in time.The two are quite similar , both of them ending near 100% of GDP. The second graph is less jiggy because it uses annual numbers rather than quarterly. Less jiggy? No biggie.FRED's notes for our Graph #2 here tell me they used the FYGFD data series for the Federal debt. This series. But instead of looking atas they do, first I want to see debt. And instead of looking at the whole Federal debt, I just want to look at the changes from one year to the next. I want to see each year's addition to the total. That will be like looking at Federal deficits. This graph shows the data I want to start with:Okay, this one makes me stop and think. The Federal deficits showfrom 1980 to the mid 1990s. I've been saying that deficits were falling since the early 1980s. Hm...Oh, that's it: Yesterday we were looking at Federal deficits as a percent of GDP . Yeah.the deficits were trending down from around 1983 to the year 2000. But, debt in billions sans context, deficits were going up during that same period. Okay. Now I get it.One other thing about Graph #3: Compare it to the data series that shows the Federal deficit, and the two are similar but not the same . They have the same pattern, and the two lines are very close until 1985. But for 1985 and after, a gap opens up and the numbers are not the same. Looks like they've been doing some creative accounting since that time.I still want to use the change-in-debt numbers from Graph #3. But I thought you should know about this discrepancy.Looking at Graph #3 now, each point on the line represents a year, the change in Federal debt for one year. But I was thinking, there was some pretty serious inflation in the 1960s and 1970s. All the numbers since then are higher than the earlier numbers. I can take the inflation out of the numbers and graph the result, and maybe we can see how inflation changed the Federal debt.Yeah, let's do that. It's the same calculation you'd use to calculate "Real GDP" from "Nominal GDP". Here ya go:So the red line shows the inflation-adjusted, or "real", changes in Federal debt.Now I can take and add them up, and that'll give me a number for the Federal debt with inflation removed. It'll be in 2009 dollars, because the GDP Deflator uses 2009 dollars.I downloaded the data from Graph #4, and added up the inflation-adjusted changes in Federal debt.It's funny though. I'm adding up the changes to the Federal debt since 1947. That means I'm not counting any of the World War Two debt or any Federal debt from before that time. We're starting with a low number, for sure.I can't add up the numbers in a FRED graph, so I used Excel. I put my inflation-adjusted Federal debt numbers on the graph in red. And I put the blue line from Graph #2 on my Excel graph for comparison (but only since 1947. You don't see the wartime increase of the early 1940s). Here's what I got:The blue line should look familiar to you from the first two graphs, up top. It's the same, except for the start date.The red line shows the Federal debt in 2009 dollars, as a percent of GDP in 2009 dollars. Everything is copacetic.Noah asks Why did rich-world deficits start exploding around 1980? They didn't , I reply.It does look like deficits "exploded" around 1980. But when you strip away the effects of inflation, there is no sudden change from downhill to uphill in the early 1980s. So I guess you can say there was a sudden change in the early 1980s but only because the raging inflation came to an end.Inflation aside, as the red line shows, the Federal debt was increasing as a percent of GDP since the end of the second World War. And I think we can see a more rapid increase starting around 1974. That's not 1980, that's 1974. These things are hidden when we look at the blue line -- which is how everybody looks at Federal debt, by the way -- because inflation and the falling value of the dollar allow us to understate the value of past debts.Thankfully, we live in a nominal world. If not for the effects of inflation, we would not have seen the Federal debt falling for thirty-plus years after World War Two.And if not for the effects of inflation, the significant increase in Federal debt growth would have occurred around 1974, not around 1982. And that is a biggie. It is important, because people key in on the date, look at the events of the time, and understand the economy based on what they see. Noah , for example, says the U.S. Federal deficit had been decreasing since WW2, then suddenly began to trend upward around 1980.I'm not offering a theory. I'm showing you numbers, and I'm sayingOh, and it's not a theory. It's a fact.If you don't start with facts, even your best theories are bullshit.