In the neo-Wicksellian framework that Krugman likes to use when the economy is at its zero nominal interest rate bound, the central immediate problem with the economy is that because private households want to deleverage--planned saving at full employment is high--and because private businesses do not want to leverage--planned investment at full employment is low--planned spending is less than expected income and the economy spirals downward.
So why in the Holy Name of the One Who Is does Steven Keen write:
The Crisis in 1000 words—or less: Rising aggregate private debt adds to demand, and falling debt subtracts from it. This point is vehemently denied on conventional theoretical grounds by economists like Paul Krugman…
?
The neo-Wicksellian framework is not a denial that times of falling debt are times of depression. The neo-Wicksellian framework is an explanation of why times of falling debt are times of depression.
"Explanation" ≠ "denial"…
