Great Graphic: US Deleveraging, Europe Still Leveraging?

This Great Graphic was posted on Business Insider by Sam Lo, who got it from Neil McLeish, a fixed income analyst at Morgan Stanley.  It depicts total debt (household, financial firms, corporates and government, divided by GDP).  Most of the chart (yellow line) tracks the US, though more recent European date is included (green line).  

The rising debt levels did not begin with the Reagan-Thatcher era, but can be traced to the post-WWII reconstruction and expansion, though there was a marked acceleration in the late 1970s/early 1980s.   

Contrary to conventional wisdom that has tended to focus on things like European austerity and the decline of the ECB's balance sheet, the chart shows that modest de-leveraging, that is the reduction of debt relative to GDP, is in fact taking place in the US, not Europe.   Fed policies, such as they are, are probably best understood as trying to facilitate this process, while supporting growth.  

Many economists, especially those influenced by the Austrian School, have a profound distaste for debt, yet few seem to recognize that de-leveraging is taking place, albeit slowly, in the US, but not at all in Europe.  Their Siren calls of a dollar collapse seem misplaced especially in the extent that it is predicated on the US indebtedness.