Let me explain sectoral balances to you: in one way, the economy can be looked at through the lens of the three sectors, the public sector, the private sector, and the third sector, the balance of trade between the US and the rest of the world. Since the third sector is somewhat settled (and please don't change the subject by trying to argue about that), we generally consider the balance between the public sector and the private sector.
The public sector is defined as the activity of the US government. The private sector is the ordinary people and the businesses they own or work for.
One major difference between them is that the government is the currency CREATOR. (US Constitution, Article 1, Section 8) The private sector consists of currency USERS.
Since the government creates its own currency, it can never "go broke" or fail to meet any of its own debts in its own currency. We, however, are not in that halcyon position. We know that we have to pay back any debt we occur.
This is why it's a mistake to talk about the government's "budget." We are automatically and emotionally thrown into a comparison with our own household budget, but they aren't remotely similar.
Finally, the "deficit" is the sum of the amount of money the government spends into the economy minus the taxes it receives. Of course the government spends more than it gets back! (Consider what our situation would be if we owed more than the government created.) Please leave aside "the debt" for a moment. The deficit and the debt are not synonymous.
Comparing the balance of the two sectors, then, if the government has a deficit, the people don't have to borrow as much. Stephanie Kelton addresses this in her book, The Deficit Myth. When a bunch of balance-the-budget neoliberals get in power, though, and want to lower the deficit, the amount that ordinary people will have to borrow RISES.
High deficit = lower peonage debt
Low deficit = high peonage debt
And the government can never go broke for any debt it incurs in its own currency.
Moral of the story: it's better for you & me to have the government have a larger deficit than for us to go into debt. They can afford it and we can't.
Let me explain sectoral balances to you: in one way, the economy can be looked at through the lens of the three sectors, the public sector, the private sector, and the third sector, the balance of trade between the US and the rest of the world. Since the third sector is somewhat settled (and please don't change the subject by trying to argue about that), we generally consider the balance between the public sector and the private sector.
The public sector is defined as the activity of the US government. The private sector is the ordinary people and the businesses they own or work for.
One major difference between them is that the government is the currency CREATOR. (US Constitution, Article 1, Section 8) The private sector consists of currency USERS.
Since the government creates its own currency, it can never "go broke" or fail to meet any of its own debts in its own currency. We, however, are not in that halcyon position. We know that we have to pay back any debt we occur.
This is why it's a mistake to talk about the government's "budget." We are automatically and emotionally thrown into a comparison with our own household budget, but they aren't remotely similar.
Finally, the "deficit" is the sum of the amount of money the government spends into the economy minus the taxes it receives. Of course the government spends more than it gets back! (Consider what our situation would be if we owed more than the government created.) Please leave aside "the debt" for a moment. The deficit and the debt are not synonymous.
Comparing the balance of the two sectors, then, if the government has a deficit, the people don't have to borrow as much. Stephanie Kelton addresses this in her book, The Deficit Myth. When a bunch of balance-the-budget neoliberals get in power, though, and want to lower the deficit, the amount that ordinary people will have to borrow RISES.
High deficit = lower peonage debt
Low deficit = high peonage debt
And the government can never go broke for any debt it incurs in its own currency.
Moral of the story: it's better for you & me to have the government have a larger deficit than for us to go into debt. They can afford it and we can't.