Like so many sloppy discussions of economics to make an important policy point, but badly, this one diverges from common shared reality fairly quickly.Â
Let me strike the key hypothesis in this, that prompts a leap of faith, over a cliff and into the abyss of fantasy.
“Debt is money we owe to ourselves.”
Something on which Mr. Krugman can agree with Dick Cheney who said, ‘Reagan proved that deficits don’t matter.’Â Â How is that for a twist? Â
From an accounting standpoint and within the realm of theoretical identities this is true. Each debt is someone else’s asset.
The key of course is how we define ‘ourselves.’ Â
Or to paraphrase the punchline to the old Lone Ranger and Tonto joke, ‘Who is we white man?’
If ‘we’ are the entire planet, equally and without distinction, then perhaps one might say, ok, although it loses all meaning and significance.  I would not mind pooling my household books with one of the Banking billionaires and to be able to step up to the Fed’s free cash window anytime to do my business, with the assurance that I have a government guarantee underpinning my ledger, but alas.
And this is a problem because the paramount issue we are facing today is the historically extreme concentration of capital assets in a relatively few hands, and the burden of unpayable debts being imposed upon a large segment of the people by a system that has been hijacked by the moneyed interests.
If you take this pithless observation by Mr. Krugman down one level of detail in the States for example, one finds that the debt is an asset on the books of a increasingly small number of wealthy people, with much of it controlled for them by a handful of Banks.
This system is not sustainable, and I see no sign that it will even cohere, without substantial reform.
I wonder if the average American who is losing their car and house, and who is being hounded by debt collectors for whom those debts seems to matter a great deal, can use that argument with the Banks.
