Paul Krugman has published a trio of blog posts on the issue of debt in the last week: “Debt Is Money We Owe To Ourselves” (February 6th at 7.30am), “Debt: A Thought Experiment” (same day at 5.30pm), and finally “Nobody Understands Debt” (February 9th in an Op Ed).
There is one truly remarkable thing about all three articles: not one of them contains the word “Bank”.
Now you may think it’s ridiculous that an economist could discuss the macroeconomics of debt, not once but three times, and never even consider the role of banks. But Krugman would tell you whyyou don’t need to consider banks when talking about debt, and call you a “Banking Mystic” if you persisted.
Well Krugman would be wrong, and you would be right.