Quote from: Iseree22 on September 28, 2011, 06:51:00 PM

Quote from: Sovereign on September 28, 2011, 10:06:03 AM

correlation != causation

I presume that your referring to the graphs I posted, and is a fair point. What do you think is more likely; that an increase in household wealth caused an increase in public debt? Or an increase in public debt caused an increase in household wealth?

This is a false dichotomy. You have established a correlation, but in no way you have been able to establish causation one way or the other. It is more likely that neither one causes the other. Increase in household wealth depends on many factors at once.

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Naturally this would depend of on your perspective of the economy. I think that public debt is the source of private money, therefore I think the latter.

Private money? 'Money' has a specific meaning that is different from 'wealth'.

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'Others' would argue the former. To me this makes little sense; if household wealth is increasing why would the State need more public debt to fund itself?? Wouldn't the state be collecting so much revenue that it wouldn't need public debt? You would expect that as household wealth increased, tax revenues would increase, and public debt would decrease. But these graphs show no indication of such correlation.

House hold wealth tends to increase with over-all economic growth. Increased public debt tends to correlate with future over-all economic shrinking: Greece example.