Stumbling and Mumbling :

Nick Clegg’s speech yesterday was either deeply ignorant about basic economic facts, or an attempt to talk down the pound.

He says he wants to “replace the old, debt-ridden economy with a new one, based on investment, export and sustainability.” The debt he’s referring to here, though, doesn’t seem to be merely government debt, but private sector debt too. He says “we are going through the sometimes painful process of unwinding a toxic legacy of personal, business and public debt.” And he wants “an economy where we sell our goods and services to China and the rest of Asia, instead of borrowing from them in order to buy the things they make for us.”

Now, let’s remind ourselves of a simple identity. Across the three sectors of the economy - government, domestic private and overseas - net borrowing must equal zero.