The debate about debt, austerity and growth implies that there is some connection between the incurring of debt and economic activity. There is, but it is very tenuous and it would be helpful if those who talk about debt, austerity and growth do so with some principles in mind.

Debt does not arise because there is more or less economic activity than we would like.  Debt is simply the result of the debtor consuming more than he produces. It necessarily involves some other person (or persons) producing more than he consumes by exactly the same amount. This kind of situation can occur whether there is a successful growing economy or in a recession, or in a stagnant economy.

Those who discuss debt always ignore the other side of the coin. They seem to think that debt exists on its own. This is a mistake. Debt is always accompanied by an

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