An excellent way to explain it. When the goverment spends, that spending is someones income and that someone pays some tax so the government immediately gets some of their money back. And then that someone spends most of their money which becomes other peoples income. And these other people also pay tax, so the government gets another fraction back. And these other people also spend which becomes the income of even more people who also give a fraction back to the goverment. And so on. If everyone spends then the government gets all its money back. Whereas when you or I spend we do not get anything back. That is a big difference. The only way the goverment can be in deficit is if the people decide to save. The goverment debt is simply the peoples savings. If at any point the people go out
Mike Norman considers the following as important:
This could be interesting, too:
Mike Norman writes Artist vs. Economist?
Mike Norman writes Yes, Banks Create Money Out Of Thin Air — Brian Romanchuk
Lars Pålsson Syll writes Friskoleeländet — socialdemokratins största svek någonsin
Lars Pålsson Syll writes Zürich — das große Schweigen
By Prof Charles Adams of Durham University