then growth would be maximised. They also convinced us that bank lending was so low in 2008 because there wasn't enough liquidity in the system. That was the flawed justification for what became known as quantitative easing. It was never going to work because lending wasn't reserve constrained. Banks didn't lend and are still not lending because there isn't enough growth. There isn't enough growth because there is not enough aggregate demand (spending) and too much of it is leaking outside the economy in the form of imports. there is not enough spending focused on the domestic economy because the private sector is trying to reduce its overall (unsustainable) debt levels and are not confident about future demand (so firms are being cautious) and public spending has been placed in a straitjacket because somehow we are being told it is bad! Growth should be the emphasis of the policy debate. In that context, there was an interesting Harvard Business Review Op Ed last week (August 8, 2011) -- The Real Solution Is Growth -- by MIT economist Daron Acemoglu. He wrote: Recent headlines have focused on the debt ceiling, the recent credit rating downgrade, unemployment, and the other thorny fiscal challenges facing the United States. But consider this: increasing the country's average growth rate by one percentage point over the next 20 years would not only result in much higher incomes and more jobs for all Americans but would also obviate the need for drastic spending cuts today to reign