How Much Credit Growth Does It Take To Expand Real GDP?

Here’s the shocking answer in several pictures.

Total Credit Market Debt Owed vs GDP

TCMDO vs GDP 2026 Q1

TCMDO: 115.556 Trillion
Nominal GDP: 31.866 Trillion
Real GDP: 24.180 Trillion

On August 15, 1971 president Nixon temporarily suspended redeemability of gold for dollars.

It turned out to be permanent. Since then, there has been no constraints on the expansion of money, national debt, or trade deficits.

TCMDO vs GDP 1971 Q2

TCMDO: 1.727 Trillion
Nominal GDP: 1.156 Trillion
Real GDP: 5.473 Trillion

Total Credit Market Debt owed vs GDP Detail

TCMDO vs GDP Between 2020 Q1 and 2026 Q1

TCMDO rose from 81.519 trillion to 115.556 trillion, up 34.037 trillion
Nominal GDP rose from 21.751 trillion to 31.866 trillion, up 10.115 trillion
Real GDP rose from 20.709 trillion to 24.180 trillion, up 3.471 trillion

In the last six years, debt has risen 10 times faster than real GDP and the curve is accelerating dramatically.

Change in Total Credit Market Debt vs Change in GDP

Change in TCMDO vs Change in Real GDP

2024 Q3: TCMDO 1.790 trillion v Real GDP 192 billion
2024 Q4: TCMDO 536 billion v Real GDP 108 billion
2025 Q1: TCMDO 1.720 trillion v Real GDP -38 billion
2025 Q2: TCMDO 1.132 trillion v Real GDP 223 billion
2025 Q3: TCMDO 2.023 trillion v Real GDP 256 billion
2025 Q4: TCMDO 1.596 trillion v Real GDP 29 billion
2026 Q1: TCMDO 1.897 trillion v Real GDP 125 billion
Seven-Quarter Average: TCMDO 1.628 trillion v Real GDP 128 billion

Don’t Worry Because

Trump promised to reduce inflation
Trump promised to cut your energy bills in half
Trump praises Walmart for lowering prices
Trump and Elizabeth Warren are investigating oil price gouging
Trump and Elizabeth Warren are investigating meat price gouging
Trump has ended 8 wars, one of them 35 times
There is no affordability issue. It’s a hoax. We are eating lobster.
Egg prices are down 400 percent says Trump. That’s what everyone should be talking about.

Reflections on Lobster

There is no affordability issue. Lobsters are proof.

View post on X

Thanks to Trump, you no longer have to go to Japan or Canada to get a Maine lobster.

There is no affordability issue. We are eating lobster and rib eyes.

So please don’t worry about inflation, prices, credit expansion, debt deficits or anything else.

It’s all a hoax.

Nixon Shock

I have been writing about the fundamental problem for nearly two decades. Here’s a synopsis from September 2019.

Please consider Nixon Shock, the Reserve Currency Curse, and a Pending Currency Crisis

In 1971 President Nixon appointed the then Democrat John Connally as Treasury Secretary. That’s when things started rolling.
Our Currency But Your Problem
Shortly after taking the Treasury post, Connally famously told a group of European finance ministers worried about the export of American inflation that the dollar “is our currency, but your problem.”
By 1971, US money supply had increased by 10%. In May 1971, West Germany left the Bretton Woods system, unwilling to revalue the Deutsche Mark. Switzerland also started redeeming dollars for gold.
On August 5, 1971, the United States Congress released a report recommending devaluation of the dollar to protect the dollar against “foreign price-gougers“.
On August 9, 1971, as the dollar dropped in value against European currencies, Switzerland left the Bretton Woods system.
On August 15, 1971 Nixon directed Connally to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the gold window to be closed such that foreign governments could no longer exchange their dollars for gold. He also issued Executive Order 11615, imposing a 90-day freeze on wages and prices in order to counter inflation. This was the first time the U.S. government had enacted wage and price controls since World War II.
The American public believed the government was rescuing them from price gougers and from a foreign-caused exchange crisis. Politically, Nixon’s actions were a great success. The Dow rose 33 points the next day, its biggest daily gain ever at that point, and the New York Times editorial read, “We unhesitatingly applaud the boldness with which the President has moved.”
So Much for Temporary
The move was not temporary. There have not been any restraints on deficit spending since.
Wars became easy to finance. Deficits? No problem.
In 2011, Paul Volcker, who replaced William Miller as Fed Chair in 1979, expressed regret over the abandonment of Bretton Woods.
“Nobody’s in charge,” said Paul Volcker.