The near-default of Greece, with contagion gradually spreading to other countries in the eurozone, has led policymakers around the world to switch from fiscal stimulus to fiscal austerity. What finance minister can sleep easy when there is a chance that they too might be forced down the road being travelled by Greece, Ireland, Spain, Portugal and Italy?

To all the world it looks like government debt is the overwhelming problem, dwarfing concerns about a weak recovery. I want to argue that this is a profound misreading of the situation. An alternative view, which appears more consistent with the facts, is that the crisis which started with Greece in fact tells us about some basic design flaws in the eurozone. Outside of the eurozone, the problem is that we have too little government debt, rather than too much.