Dear Editor,
Paul Krugman failed to predict this crisis because he doesn't understand debt's cancerous effect on the individual, the economy, and the nation.
Steve Keen predicted the crisis and was awarded the Revere Award for his early warning. He received nearly twice as many votes as runner up, economist Nouriel Roubini.
Keen discovered the debt problem when he was hired as an expert witness in an Australian foreclosure. He then discovered an environment of excessive debt in Australia and the US on the order of that preceding the 1890 & 1929 Depressions.
The American solution has been to bail out AIG, Fannie, and Freddie... In short, our congress has transferred the bad debt of banks and corporations to our children and grandchildren. It has already been done. Our heirs are now encumbered. There is no going back. The present value of our children's future taxes has already been borrowed and given to bankrupt banks and corporations.
What should have been done? The traditional solution was to let bankrupt companies and individuals go bankrupt. There was pain. But it was a quick, clean, fair way to eliminate cancerous debt.
The Great Depression was pro-longed because FDR's programs delayed the elimination of debt.
Steve Keen & Dr. Michael Hudson (Kucinich's former economics advisor) entertain the idea of a Biblical style Jubilee, where debt is forgiven in a major way.
In my opinion the market solution of bankruptcy is the way to go because that is the way our society has dealt with excessive debt. Concepts of 'Jubilee' do not exist in our culture or our legal system. In any case, overbearing debt must be dealt with as fairly as possible. Congress has infinitely complicated this matter by transferring private debt to our children.
Krugman is irrelevant because he doesn't understand debt and thinks we need more of it.
