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NIce one Gail, but I wonder personally if debt is the issue: to me its just a symptom. If you take economies as pure systems, then they have natural feedback and feedforward paths. Debt is a way – especially debt based on notional, rather than actual, security – of trading notional surplus today for increased prosperity tomorrow: That is, it is a hugely effective way of accelerating growth in a system that is not resource limited. IN a system that is resource limited, where no growth is physically possible, spiralling debt merely reflects an attempt to engender growth where none is available. Debt itself is not the problem, its merely a symptom of the problem, associated with the fact that governments financial institutions and so on, are desperately trying to create the growth they need to balance their books, when it cant be done. Debt is conceptually easy to solve. simply devalue it by 10 or so. All savers lose 90% of their savings, all borrowers lose 90% of their debt. Wealth gets transferred from lenders to debtors. That’s largely what debt ridden governments have done with QE et al.

The Krugman Solution: "Take the line of credit and fix the house. Yes, your monthly costs will go up a bit, but once the house is fixed you can cut back slightly on non-essentials, get a raise or a different job where you'll make some extra money. and eventually pay off the line of credit."

A lot of it was spent on bailing out US banks and that money is still there, as well as money funnelled into well connected corporations within the US. Already in the UK inflation is going out of control because of QE in this country, why should the US expect to be any different? What will happen when the US’s banks begin lending those trillions they are sitting on?

prefer ron paul /austrian economics view of life, but if you take on fiat debts worth trillions… you can’t solve the problem by cutting spending and having people suffer for this, this is not right, this type of debt should be canceled first (at least most of it)