How to reduce the debt? Where’ve you been the last three years? In case you hadn’t noticed several countries have simply printed money and bought back large chunks of debt under the guise of QE. And contrary to the predictions of large numbers of economic illiterates, that’s had little inflationary effect.



In fact it would be perfectly possible to buy back the entire debt. As to any inflationary effect, that would be easily countered by raising taxes.



Of course under QE the debt is still there in the hands of the central bank. But the central bank is effectively just an arm of government: i.e. that debt is simply a debt owed by one arm of government to another. As numerous articles (and a letter from me in the Financial Times) have pointed out, that debt might as well be torn up: the effect on the real world would be zero.

