I'm not an economist and I haven't read Prof. Rogoff's book so prudence should dictate that I keep my mouth shut, BUT... :-) It seems to me that in this essay he seems to aggregate the economic effects of all debt "overhangs" without regard to the underlying causes. As if a country doesn't balance it's spending over the business cycle (i.e. it spends too much and refuses to tax itself) is morally or economically equivalent to one which is bailing itself out of a financial crisis. He cites Japan as the examplar, as if Japan had merely overly stimulated in an inventory-cycle recession. But my recollection is that Japan had the mother of all financial crises. Would their GDP really be 25% higher now had the government let the financial system collapse? Is a financial crisis different from a normal business-cycle recession? Is a tornado qualitatively the same as a thunderstorm, just larger?