Economics in the era of crises

Now that private debt is falling relative to GDP, deleveraging by the private sector dominates half-hearted government stimulus packages, so that high unemployment persists years after the recession was formally declared to be over by the NBER. The crisis will continue until private debt levels are drastically reduced from today's Ponzi-driven heights, while in the meantime, second-order effects of the dynamics of debt will dominate asset markets as well as economic activity.

Figure : Credit Accelerator and Change in the DJIA

To escape from this crisis, we need not only to focus on its real cause - excessive private lending that funded Ponzi bubbles in asset markets - but also to escape from the Neoclassical mindset "which ramify, for those brought up [on it], into every corner of our minds" (Keynes 1936). That intellectual liberation is the objective of Debunking Economics.