just recall when Northern Rock failed in 2007. There was the first run on a bank in the UK for 160 years.
That is literally how all money is made. One lender, the bank. One borrower, the customer.
It cannot be just the one bank otherwise there never would have been the run on Northern Rock.
It has to be the banking system as a whole, not just the one bank….that’s how one bit of it can run out of money, because one bit of it cannot create money.
This is simply gorgeous:
Tax also does something else. By reducing what we can spend it restricts the size of the private sector economy to guarantee that the resources that we need for the collective good that the public sector delivers are available. Tax makes space for things like education.
He would, of course, deny there is anything like crowding out. Then he insists that the purpose of tax is crowding out. Sigh.
So, as a matter of fact a government like that of the UK that has its own currency and central bank has to run a deficit. It’s the only way it can keep the money supply going. Which is why almost all governments do run deficits in the modern era.
And please don’t quote Germany to me as an exception to this because it, of course, has not got its own currency. It uses the euro, and the eurozone as a whole runs a deficit, meaning that the rule still holds.
OK – Singapore.
And this is equally gorgeous:
This gives the clue as to another weird thing about this supposed national debt. It really isn’t debt at all. Yes, you read that right. The national debt isn’t debt at all.
That’s because, as is apparent from the description I have given, the so-called national debt is just made up of money that the government has spent into the economy of our country that it has, for its own good reasons, decided to not to tax back as yet.
So it’s our debt to the government then, some amount of tax that we’ll get charged in the future. Which is, of course, just what we’ve all been saying all the time. The national debt is going to be paid by taxing us some more in the future.