Bonus track: 225 years of public debt

(… the previous post was a social experiment: I wanted to see what comments I collected here, at our house, to compare them with those collected in the two factories of discomfort. I have to say that Facciabuco gives me the feeling of being more authentic compared to the sewer: the level is lower than in the sewer, but there are fewer infiltrations. Our friends probably spend less on it because they think it is a platform now in its terminal phase, but it is precisely their inattention that makes Facciabuco interesting. For those of you who are subscribers, and therefore have a front-row seat, I show a bonus track : the one obtained by applying the Reinhart and Sbrancia method with data dating back to the beginning of the 19th century. A clarification is necessary: ​​not all countries are present for the entire sample. In the year 1800 we only have data for Sweden, the United Kingdom and the United States, to which we add the Netherlands in 1814, then Portugal in 1851, Italy in 1861, etc. This means that before the In 1880, when Austria, Belgium, Denmark, France, Germany, and other states joined, the variability of the series could be affected by fortuitous circumstances. For example, one would expect that with the end of the Napoleonic Wars, the debt would immediately begin to decrease, but instead it increased because… the Netherlands entered the calculation with above-average values—142% of GDP, compared to an average of around 82% for the other available countries! Nonetheless, the story described by this series has its own plausibility and interest… )

(… devastated by your comments on the previous graph, this time I'll comment, which is better. The first lesson is that when it's truly worth fighting an enemy, one is even willing to go into debt to do so! The three peaks correspond to the three wars against Napoleon, against Hitler, and against labor. Incidentally, we note that on two occasions financial stability was put at risk to fight two unifiers of Europe. From this we should draw – I believe – a secondary but perhaps no less important lesson: imperialist projects cost, directly or indirectly, especially when they are absurd. Another lesson is that depressions do not have a particularly positive effect on public finances. The period from 1873 to 1899 actually saw a generalized increase in the debt-to-GDP ratio, corresponding to the long depression , which as far as I can see is the most fitting historical parallel to the period we are living in – and this is one of the reasons why you have often heard me say that this era reminds me of the Belle Époque! It is therefore not surprising that the debt-to-GDP ratio also increases from 1929 to 1934, and of course it is not surprising, for other reasons, that it increased during the world wars. There have been periods in which the ratio was higher than today, but similar levels have always proven unsustainable and somehow we have returned to lower levels. We have listed the possible paths to this end several times, and they are essentially three: explicit default, implicit default – that is, hyperinflation, and regulation of the capital market, that is, among other things, abandoning the dogma of the independence of the Central Bank. Reinhart and Sbrancia discuss this extensively in a paper that we have cited several times . The cultural poverty of the comments in the two sewers is truly distressing. We must avoid wasting time with imbeciles, but we must also avoid falling into self-referentiality. There are still too many people who simply do not know these things, and they do not know them because "we are not millionaires". Discernment is required: we must silence the provocateurs and the ass-kissers, but at the same time we must delicately open up Keep an eye on those who deserve a chance. These are complex times, and each of us has a great responsibility. We must ensure that the wrong path is not taken because we don't know which is the right one, or, even worse, because we think that those who must decide must know which is the right one. Many of my colleagues ignore these data, these historical facts, and these analyses—I'm referring to the graph and the links, which you unfortunately don't read—and they can't be blamed for that! I'm not saying that an apostolate that isn't pushy and dismissive can be decisive, but it won't do any harm. This is also why I'm considering republishing the original …)

This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL https://goofynomics.blogspot.com/2026/01/bonus-track-225-anni-di-debito-pubblico.html on Sat, 17 Jan 2026 18:45:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.