© Phil Noble/ReutersDavid Cameron is to urge the public to pay off its credit card and store card debts.
To our ears that sounds both callous and wrong. But that's partly hindsight - Mellon was speaking before Keynes wrote The General Theory of Employment, Interest and Money. David Cameron has no such excuse. He is set to tell us today in his conference speech that "the only way out of a debt crisis is to deal with your debts. That means households - all of us - paying off the credit card and store card bills".
But with fiscal policy set on what Martin Wolf has rightly described in the Financial Times as "kamikaze tightening", the UK needs the private sector to pick up the slack. If all sectors - the government, firms and households - increase saving simultaneously, in an effort to reduce debt, it will further depress domestic demand, reduce output and jobs, and we will end up in a downward spiral. This is what Keynes described as the paradox of thrift.
