Home > Main > “The most important event in the history of humanity since the domestication of animals and plants” happened in a country with Debt to GDP greater than 150%

“The most important event in the history of humanity since the domestication of animals and plants” happened in a country with Debt to GDP greater than 150%

December 9, 2010

The one of the most important developments in  human history – the industrial revolution in Britain – happened in a country where the Debt/GDP ratio was always greater than 100%. For much of the time, debt was higher than 150% of GDP.

Here is some Wikipedia goodness on the Industrial Revolution:

Economic historians are in agreement that the onset of the Industrial Revolution is the most important event in the history of humanity since the domestication of animals and plants.

From New Deal 2.0. via this excellent Mike Konczal post, it turns out  the Industrial Revolution happened while debt to GDP was over 150%:

Does the world’s most prominent economic historian know a basic economic relationship among Britain, its debt, and the most important event in the history of humanity since the domestication of animals and plants? He spends so much time talking about debt levels…Maybe he would say something like “we would already be flying cars around if the Industrial Revolution happened during a time with a lower debt to GDP ratio.”  heh.

But a more reasonable explanation is that the high debt to GDP ratio had positive impact on causing this industrial revolution.  The money swishing around Britain probably funded many seemingly useless projects that later turned out to have vast economic importance.

All this on a day when the U.S. 10 year note gets kicked up to a 3.20% yield, and Roubini says bond vigilantes could come after the U.S.  Nice break of the head and shoulders neckline, eh?  I’ve had that on my chart for a few weeks now…

[Update 5/1/2011:  The excellent Letsgetitdone caught that I wrote Mike Rorty, not Mike Konczal. Thx LGID!]

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