Funding the Future Governments aren't like households
Nov 23, 2025
The discussion challenges the misguided household analogy often used by politicians. It highlights how governments create money, contrasting that power with household financial limitations. Cutting government spending can ironically reduce tax revenue, a situation not faced by families. The emphasis is on real resource management rather than mere cash flow. The conversation ties austerity to a decline in public services and trust, advocating for a reimagined economic approach focused on resource outcomes rather than strict budgets.
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Government Is The Currency Issuer
- Governments create the currency their citizens use, while households only use it.
- This means governments cannot 'run out' of their own money the way households can.
Spending Cuts Reduce Government Income
- When government spending falls it reduces incomes across the economy and thus reduces tax receipts.
- Cutting state spending therefore shrinks government revenue, the opposite of household savings logic.
Macro Is Not Micro
- Macroeconomics differs from micro because aggregated behaviour changes outcomes.
- What is prudent for an individual can be destructive if every household follows it collectively.