Those who have followed my economic blathering will understand this post/video.
As I've stated before, money is debt and debt is money. This video/presentation, When Credit Helps, Hinders and Hurts(pdf) by Dirk Bezemer mentions this fact. What it also discusses is how the balance of credit held by the financial sector and the related debt in the private sector can never balance. At sometime you cannot create more and more credit (financial sector) expecting debt (private sector) to keep up.
Bezemer says we must reduce the credit on the financial sector side. To do this we can do the austerity plan but that will be long and painful. Instead we need to allow the market to play this out. He doesn't go into details at the end due to time.
Even though he trashes the Austrian idea of barter and trade (think Schiff), he does recognize that the market through regulation (maintaining contracts) will only be the way to reduce this credit in the system.