When the Prime Minister David Cameron decided to devote a portion of his conference speech to urging us all to pay off our debts, he must have known he'd face a blizzard of criticism from the mainstream economies profession.
But he should have stuck to his guns - and not re-written the speech at the last moment, dropping the controversial passage.
We'll be told a hundred times over the next twenty-four hour that the PM is economically illiterate. The grave of John Maynard Keynes will be disinterred again and again to remind us that if everyone pays off their debts at the same time it will in fact be very bad for the economy.
Don't listen to them.
In fact, Cameron is absolutely right first time around. It is the mainstream economics profession that has got this wrong.
There are circumstances where an economy can suffer from too much saving. If everyone hordes their money rather than spends it, there will be too little demand, and the economy will suffer. That may have been the problem in the 1930s, when Keynes first identified what he called 'the paradox of thrift'.
But it certainly is not the problem we suffer from today. You need to be clinically insane - or else an economics correspondent for the BBC - to believe that trouble with the UK economy in 2011 is that we save too much.
Actually, the problem is that we save too little, and borrow and spend too much. According to the Bank of International Settlements, the UK is one of the most heavily indebted countries in the world. UK government debt is 89% of GDP, corporate debt is 126% of GDP and household debt 106%. Some other countries have higher debt in some categories - Japanese or Italian government debt for example - but only the UK, Canada and Portugal are above the 80% in all three. A study by the senior economists at the BIS found that once debt - any sort of debt - got above the 80% of GDP level, then growth slowed down.
The reason isn't hard to understand. People with too much debt worry about how they are going to keep it under control. Consumers stop spending. Companies stop investing.
And no, it does not hurt demand if we pay back our debt. For every borrower, there is a saver. If our credit card debt is repaid, the bonds issued by the credit card companies get repaid. The savers - either institutions or individuals - get repaid. Then they re-invest somewhere else. Demand shifts from one place to another - but it does not disappear.
Right now, the UK is suffering from a balance-sheet recession. The economy is sluggish because we all have too much debt - and we can only fix that by paying it back.
Cameron got this completely right - and most economists completely wrong. It just a shame that he bottled it.
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