By 2008 the US trade deficit was still very large (roughly 5% of gross income) and our net debt position was around $5 trillion (over 1/3 of gross income). Unfortunately, it also appears that we have fallen into a major recession of uncertain duration and depth. Discuss the causes of this current recession, and: a) the discernible differences between Keynesian and Classical (aka Monetarist) in their preferred approach to recovery; and b) the parallels with Japan's (non-) recovery.

Question

By 2008 the US trade deficit was still very large (roughly 5% of gross income) and our net debt position was around $5 trillion (over 1/3 of gross income).  Unfortunately, it also appears that we have fallen into a major recession of uncertain duration and depth.  Discuss the causes of this current recession, and: a) the discernible differences between Keynesian and Classical (aka Monetarist) in their preferred approach to recovery; and b)  the parallels with Japan's (non-) recovery.