The UK economy is troubled by three mighty deficits. Individuals and companies borrowed too much in the good days. They are now scrambling to pay some of it off. Broken banks have little to lend to them and then only at a high price.

The banks overdid it. They are now being forced to rein in their private sector lending, to improve their balance sheets. They are building up more money to lend to the government. The Regulator tells them lending to the government is a safe thing to do, and they should do more of it.

Now the government is overdoing it. The public debt is large and increasing at a rapid pace.

The government says it needs to borrow more to keep the economy going. They think more public spending and borrowing will produce recovery. The danger is it is starts to do the opposite.

If the government pre empts too much of the available cash, there is too little for everyone else to use and borrow. If the government demands too much money from markets, lenders may force up the interest rates before lending more. That would be bad news for the private sector as well.

In the short term the strain is being taken on the currency. International investors and governments do not like the look of sterling so they are selling it, or declining to buy.

Some fall in our currency could be good for exporters. It should enable them to sell at keener prices. It also will cut off some imports, as foreign luxury goods will be dearer. Too large a fall can get out of control, and just makes us all poorer.

As we import around one third of all that we buy, each 10% fall in the pound adds around 3% to our bills – or takes that much off our incomes.

If you print too much money you cut its value. At some point the government has to stop printing money and go back to a more normal approach. Every pound the government borrows on behalf of taxpayers one day has to be repaid. We do need to pay the interest on all that debt. We cannot put off the day much longer when we have to start putting our house in order, before markets do so in a painful and unhelpful way.

This was a crisis brought on by the private sector banks and others borrowing too much. It cannot be solved by the government borrowing too much. I wish it were otherwise. History shows that you can only have a sustainable recovery when the government puts its own house in order. We also need the banks to sort themselves out more quickly, as the broken ones are still not working for the rest of us in the way that is needed.