2015-10-29 — forbes.com
So back to Krugman, the Neoclassicals, and the fantasy of a "natural real rate of interest". This is the notion that there is some rate of interest which will result in full employment... This is wrong on many grounds, but the key one is that it is bundled with the belief that, while the price of debt is crucial to macroeconomics, the quantity of debt is irrelevant.
...
[But] the correlation of the change in private debt in the USA with the level of unemployment is minus 0.92. Not only is the magnitude of this correlation gob-smackingly high (for economic data), it is also substantially larger than the correlation of the real rate of interest with the unemployment rate (minus 0.57).
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