WELCOME BACK, CARTER! World Bank: Get ready for That 70s Stagflation Show.

The global stagnation at the end of WWII came in large part because so much national wealth had been destroyed in Europe and the Pacific Rim. The US avoided much of that destruction, and even then we suffered through an economic downturn in the immediate aftermath of the war. Without capital to invest, Europe entered into a stasis of poverty and famine, until the US pulled together its Marshall Plan after dealing with our war debt to revitalize the continent.

The lack of real capital then parallels our situation now. In the 1970s, we had oil shocks, asset bubbles, and over-regulation that created the stagflation maelstrom, but we didn’t have a significant amount of national debt in relation to GDP. The debt-to-GDP ratio remained in the low 30% range all decade long, giving the US lots of flexibility for budgeting and investment.

Now, however, we’re back to oil shocks, asset bubbles, and over-regulation impeding economic growth, but our debt-to-GDP ratio is now 124%. That’s higher than it was during World War II in any one year; 114% in 1945 was the wartime high, and it got to 119% in 1946 as the US economy went into recession. We no longer have any flexibility for capital investment to deal with the strategic conditions of the present day, especially while we refuse to extract and refine the oil we can access.

In retrospect, this was the moment when we know that ’70s Show was guaranteed to be in reruns for quite some time: