Some Frightening Economics Graphs

Since I have taken an economics class and actually understand some economics now, I’ve been reading economics-related stuff in order to learn more. I found this fabulous report on emerging markets from State Street Global Advisors – you can access it in PDF format here (I clicked on an ad in the sidebar of The Economist – who knew those ads could actually yield useful information?).

I haven’t read the entire thing yet, but I found some truly frightening charts. First, here’s how the monetary base of the US, UK, Japan, and Europe (i.e. the euro zone) has changed from January 1999 to April 2012:

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That is just scary (aside from the UK statistic). The monetary base is the sum of currency in the hands of the public and commercial banks’ deposits held in the central bank’s reserves. Basically, you don’t want to have too much currency in circulation, or else inflation will occur. (And for those who don’t know or don’t remember their history, rampant inflation can easily wipe out your entire life savings. It happened in Germany after World War I and it happened in Russia in the late 1990s. Neither experience was pleasant for the people living in those countries.)

The next chart was interesting because I hadn’t known this fact before (regarding the prior chart above, I was aware that the monetary base had increased, but had not seen it in chart form before).

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That chart shows the government budget deficit as a percentage of GDP. Brazil, of course, has the lowest value (it has a surplus – go Brazil), followed Russia, China, and Germany. Notice how high the United States is – a whopping ten percent. I don’t like high budget deficits because, the way I see it, someone has to pay that off at some time in the future. That someone will be citizens of those respective governments’ countries, in the form of insanely high taxes.

So, there are the two most interesting charts I’ve seen in that report. I’ll post more later if I find other ones that strike me as important.


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Natalie K.

Banker. I like good things like foreign languages (I speak Russian!), history, writing, reading, playing violin, and knitting. I have a fabulous blog about all of the above.