First-time readers, the dialogue in this blog is set in the future (sometime after the year 2020).  Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution.  More about Revenge Revolution and author, Entry #1.  List and general description of entries to date.  Annual assessment whether Revolution plausible.

Note: most characters appear in a number of entries, with many entries building on previous conversations.  Profile of characters.  You’ll catch on quickly.  Thanks for your time and interest…and comments.

Gelly:  “I’m headed to the break room.  Jordan, your cup’s mostly full.  Drone Man, would you like more coffee?

Drone Man:  “Gelly, how ‘bout a stiff drink instead?  All this talk about who ran up the debt is bothering me.  Actually, coffee would be great.  Thanks.”

(Drone Man and Jordan each check phones until Gelly returns with coffee.)

Drone Man:  “Thanks.  Gelly, you’re very kind…unlike your buddy here.”

Jordan:  “C’mon, Drone Man, don’t take all this discussion personally.”

Drone Man:  “How else can I take it?  Your attacking my fundamental beliefs.  On top of that I voted for Trump.  I’m still asking myself why.”

Jordan:  “So you made a mistake and voted for the Trumpster.  Yes, the Trump administration was an absolute disaster.  Look, we all make mistakes.”

Jordan:  “But I should have known better.  I let ideology override good, objective analysis.”

Gelly:  “Are we getting sidetracked?  I thought this conversation was to be about economic policy.”

Drone Man:  “My fault.  It’s hard to admit that you’ve been spouting the wrong line for so long.  OK, Jordan, show me that chart you were talking about.”

Jordan:  “You mean the chart with US debt as a percent of GDP?”

Drone Man:  “Yes.  The debt percentage is what you were pounding into me a few minutes ago.  Really should look at the chart but I’m afraid to.”

Jordan:  “Here’s the chart.”

Drone Man:  “How do I interpret this chart?”

Greenie:  “May I try to explain this.  Doing so will make sure I understand.”

Jordan:  “Good idea.  Go ahead.”

Gelly:  “When calculating the percentage, the numerator is total outstanding debt and the denominator is gross domestic product, aka GDP, for the year.”

Drone Man:  “Gelly, don’t confuse me.  Have you turned into some kind of math whiz?  Numerator, denominator.”

Gelly:  “You know, Drone Man, total government debt outstanding at the end of the year divided by the GDP for the year.  That gives you the percentage debt to GDP.”

Drone Man:  “Debt for the year or total debt?  Makes a big difference.”

Gelly:  “Total debt.  You know, like the sum of how much you owe on credit cards, car loans, mortgage, and whatever else.  Right, Jordan?”

Jordan:  “You got it.  Keep going.”

Gelly:  “So if total debt goes up during the year but GDP grows even faster, then the percentage decreases.  The percent also declines if the country pays off some of the debt.”

Drone Man:  “OK, so the chart shows some percentage – ‘a’ divided by ‘b’.  Debt divided by GDP.  But even if percentage declines, the amount of debt can go up, right?  More debt is bad.  Where’s the chart of total debt?”

Jordan:  “Tell me why you think more debt by itself is automatically bad.”

Drone Man:  “It just is. My gut tells me it is.”

Jordan:  “Let’s say you’re a banker.  What do bankers do?”

Drone Man:  “They take your deposits…and they lend money to other people or businesses.”

Jordan:  “Well, Mr. Banker, you have two customers who want to borrow $100,000,000.”

Drone Man:  “OK, I’m the banker…and it must be a big bank.  Who are the two customers?”

Jordan:  “Say Gelly is one…and the other is Warren Buffett.”

Drone Man:  “No offense, Gelly, but you don’t make the cut for the 100 mil.  But Buffett?  He gets the loan.”

Gelly:  “I’m not offended, Drone Man, but why lend $100,000,000 to Warren Buffett?”

Drone Man:  “Simple.  He’s got enough income and assets to pay back the bank.  Paying back $100 mil and he wouldn’t even break a sweat.”

Jordan:  “So, as long as someone has enough income or assets to pay back the note, having debt is OK?”

Drone Man:  “Sure.  I’d lend Buffett $500,000,000 in a heartbeat.  He’s really no risk.”

Jordan:  “If you’d lend to Mr. Buffett, then why are you concerned about lending to the US government?  The US government is actually a better credit risk than Buffett – he can’t print money and the US Treasury can.”

Drone Man:  “Why are you always trying to trap me with these arguments?  Besides the US government has been reckless in running up the debt.  Buffett’s been very careful and very conservative financially.  That’s why there should be a conservative in the White House.”

Jordan:  “Let’s go back to what we talked about earlier and see which administrations have been reckless in running up the debt.”

Drone Man:  “A few minutes ago (Entry #229), you tried to tell me Reagan ran up the debt.  But look at your chart.  At the end of Reagan’s term debt as a percent of GDP was only about 50%.  At the end of Obama’s term it was about 110%.  That proves Obama was reckless and the cause of all the debt problems.  Just look at your own data.  See?”

Jordan:  “Let’s look at this bar chart.  It’s the same data as the line chart but formatted differently.  The bars represent the relative increase in debt as a percent of GDP for every president since Carter.  The height of the bar represents how much more debt as a percent GDP was there at the end of an administration compared to debt at the beginning of an administration.”

Drone Man:  “Before we go farther, what’s this ‘relative increase’ stuff you’re talking about?  Another way of distorting the truth?”

Jordan:  “Drone Man, do you think I would lie to you?”

Drone Man:  “No, but I just want to make sure I understand.  Gelly, tell me what he’s talking about.  I can understand you.”

Gelly:  “Think of ‘relative increase’ like this.  Your mother makes a pie.  You and your brother each get a slice that equals 25%, or ¼ of the pie.  Then your brother asks for more and your mother gives him another slice, another ¼ of the pie.  You object.  Your mother says she only gave him another 25% or ¼ of the pie, and for you to be quiet.”

Drone Man:  “She’s wrong.  He didn’t get just 25% more.  He got twice as much as I did.  He got 100% more than I did.”

Gelly:  “Now you understand the term ‘relative increase.’  Your brother’s relative increase was not 25% but 100%.”

 

 

 

 

 

 

 

Drone Man:  “Ok. I got it.  Thanks Gelly.  Back to your bar chart.  If I’m reading the first bar correctly, under Carter debt as a percent of GDP declined.”

Gelly:  “That’s correct.”

Drone Man:  “Then under Reagan, the relative increase in debt as a percent of GDP was about 60%.  You said that before but I didn’t believe it.”

Jordan:  “If you add Bush 41 to Reagan and compare against when Reagan took office, then debt went up more than 100%.  You can’t just add up the bars since you have to compare end of Bush 41 against end of Carter’s term.”

Drone Man:  “Why hasn’t anyone ever told me this?  I’ve always been lead to believe that Reagan was a fiscal conservative.  He spent money like a drunken sailor.”

Gelly:  “Careful.  My nephew is a sailor.”

Drone Man:  “Look at the Clinton years.  Debt went down.  Under Bush 43 it shot up again.  Why?”

Jordan:  “Bush implemented tax cuts biased toward higher incomes.  The tax cuts didn’t help middle and lower-income families and the economy really didn’t grow fast enough to offset the loss in revenue from tax cuts.  Now you know why professional economists keep saying that trickle-down economics doesn’t work.  Bush 41 called it ‘voodoo economics.’  I think of trickle down, or supply-side economics, more as a 3-card money game.  You think you should win but only the shills win.  You always seem to lose.”

Drone Man:  “This chart is awful!”

Jordan:  “What’s awful about it, Drone Man?”

Drone Man:  “I’ve been bamboozled all these years.  Are you sure these numbers are right?”

Jordan:  “Yep.”

Drone Man:  “OK, then I confess.  I’ve been wrong a long time about the Republicans’ economic policy.   Tax cuts concentrated at the top aren’t the silver bullet for economic growth.”

Gelly:  “Want a refill Drone Man?

Drone Man:  “No I gotta go and get back to my niece’s tour group.  I hate to say this, guys, but thanks for the lesson in economics.  And the lesson for me — no more Republican 3-card monte games.”

(To be continued)