You showed the American private debt/gdp ratio. In business, we understand debt better when we also see the assets, so here's the debt numbers along with the private assets/gdp ratio.
Showing assets and debts together tells a lot more about America's financial position. The space between assets and debt is the net-worth, or wealth, which has been growing a lot over the decades.
It's only in politics that people show just the side that supports their cause; showing one side can either support America or bash America, depending on the slant.
You can plainly see from your second and third charts that there is nothing unusual about the rise in the debt in this recession, nor in fact in the last 10 years. It’s been going up steeply for more than 10 years. Were you worried about a depression during the 90’s or during the 2001 recession? Debt is a crucial ingredient of our economic brew. Right now, in fact, a little more borrowing would be a good thing.
You seem like a smart guy. Read a book called “Hamilton’s Blessing.” It explains that Alexander Hamilton wrote to a confidant that one of his goals as Secretary of the Treasury would be to build up a body of US government debt because he believed that it would be a blessing to the nation. Most folks would say that’s nuts. Debt is not a blessing but a liability. Why would you want to encourage that?
But Hamilton was a financial genius, and he understood that the debt would be traded as money, and that would encourage commerce. Ultimately, federal debt was made legal tender, and broken up into standard denominations so that it could be more easily used as money. If you look at a dollar bill, it says “Federal Reserve Note.” These days, federal treasuries are used and accepted as money on a regular basis, particularly when cash is not available. All you are doing when you increase federal borrowing is you are increasing the money supply. And if you don’t believe me, then consider that it’s very easy for the Fed to convert federal debt to money. All it does is print more money and buy a t-bill.
So the issue is not debt, but money. Is the money supply growing too fast? I don’t think so. We’re in a recession, so that tends to show that it is not. What about when the recession ends? Well, when that happens, the Fed may need to tighten up in order to siphon off some of the money it is now printing.
Recession and inflation don’t usually come together, so you don’t need to deal with them at the same time. They certainly did not come together this time. When they do come together, it is usually because of a supply shock, or because you had inflation first, and are trying to wring it out of the system. We don’t have either of those, so we have the luxury of focusing on ending the recession and worrying about inflation later, if at all.