Nobody understands debt–including Paul Krugman

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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.

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.