Economists have been mulling over the shape financial reforms should take. Robert Shiller wrote on these pages in defence of “financial democracy”, arguing that a wide range of financial products allows everyone to access liquidity and insure against risk. A week earlier in The New York Times, Paul Krugman pinpointed the way bankers are paid as the focal point of reforms. The problem with these discussions is that they introduce red herrings. Dear top economists, the problem is debt. Any solution that sidesteps this is a non-starter.

As I wrote in the FT last month, the crisis and recession were not all that difficult to predict once you started to look at the flow of funds – at credit and debt – and at the financial sector as separate from the real economy. Following the same logic, it should now be fairly uncontroversial what our long-term aim in financial reform is. It is to redirect lending away from bloating the financial sector and towards supporting the real economy, rather than loading it down with debt.