Re-writing history to fit the obsolete interpretation of reality, what a collection of non-sense.



"The advanced countries have fallen into the debt-deflation trap because they were unwilling to accept the political pain of real-sector restructuring, relying instead on financial engineering and loose monetary and fiscal policies"



The problem is that the crisis pre-dates the monetary expansion, which was a solution to the "debt" problem... A tiny detail that gets in the way..



Also, to call for the pain of real-sector restructuring - can you be more supply side then this, when the problem was a major financial crisis caused bu sub-prime fraud (not exuberance from monetary expansion, fraud

was the reason) and a whole continent in brace with a non optimal currency zone and a currency system that has so many holes that resembles a fisherman's net...



Regarding Fisher's view, I think the problem here is like in Fisher explanation, which is that he never explained the why of the shock, i.e. he assumes that the crisis started and over-indebtedness just makes things worse (well debt leverages all)



So, first we have to understand why China is in this situation, and we can agree for most, that the situation is an international condition, not China specific, so stop putting the blame on debt.



Debt can never be blamed because its an equation, debt has a counterpart - deposits, so if we have to much debt, we must have to much deposits, and also we know, from Mogdiliani-Miller, that debt doesn't change the value of the asset.



Finnally if we study world economies we find that the higher the level of the Debt the higher the level of development, and not the opposite.