The aim of academic trade theory is to tell students, "Look at the model, not at how nations actually develop." So of all the branches of economic theory, trade theory is the most wrongheaded.

To the deficit commission, a depression is the solution to the problem, not a problem.

Needless to say, banks and bondholders do not want to promote any arguments explaining the limits to how much can be paid without pushing economies into depression.

As you have to pay more interest and amortization on what you owe, you're left with less and less money to buy goods and services - unless you borrow even more and go further into debt.

Everybody would be better off if they could buy housing for only, let's say, a carrying charge of one-quarter of their income. That used to be the case 50 years ago. Buyers had to save up and make a higher down payment, giving them more equity - perhaps 25 or 30 percent. But today, banks are creating enough credit to bid up housing prices again.

Education is something that should not be organized on a for-profit basis, because in that case its purpose is not really to provide an education. It's not to teach students how to get better work, but how to provide banks with a free giveaway opportunity from the government, by making junk loans that are defaulted on. The effect may be to wreck the futures of the graduates that fall for the false promises that are being made.

The real estate interests and banks are in a kind of symbiosis. They're the largest-growing part of the economy. This is the sector that backs the political campaigns of senators, presidents and congressmen, and they use this leverage to make sure that their people dominate the Federal Reserve, Treasury and the federal housing agencies.