no one grasps the economic role of debt
many economists, including janet yellen, view global economic troubles since 2008 largely as a story about ''deleveraging'' a simultaneous attempt by debtors almost everywhere to reduce their liabilities. why is deleveraging a problem because my spending is your income, so if everyone slashes spending at the same time, income go down around the world. or as ms yellen put in 2009, ''precautions that may be smart for individuals and firms and indeed essential to return the economy to a normal state nevertheless magnify the distress of the economy as a whole.''
so how much progress have we made in returning the economy to that ''normal state'' none at all. you see, policymakers have ben basing their actions on a false views of what debt is all about, and their attempts to reduce the problem have actually made it worse.
last week, the mcken