Many Happy Returns cover image

Politics vs Economics: What Politicians Misunderstand About Markets

Many Happy Returns

00:00

The Government's Analogies to Household Finances

The analogy you always see between the government finances and household finances is flawed. A government can create money out of nowhere, because it can borrow in the debt market. The other point is that a large chunk of the national debt might be held domestically - not all owed externally. And personally, I like the idea of buying a government bond because effectively it's like voluntary taxation but you get paid to do something good.

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