And Sovereign Governments:
Issue fiat money which is not backed by gold or anything else.
Aren’t like a household or your family. They don’t have to balance their budgets.
Don’t tax first then spend later.
Don’t have to rely on raising taxes to cover their spending.
Don’t save their tax revenue. They destroy it.
Don’t spend money like we do. They create new money as they need it.
Aren’t users of their own currency. They are issuers.
Can’t ever run out of their own money .
Can’t borrow their own money (their own IOUs).
Can’t save up their own money for a rainy day.
Can’t have their own money or not have their own money.
Don’t sell bonds to fund deficits. (John Armour)
Debt does not burden future generations.
Do not have direct control over their budget deficits
Deficits aren’t dependent on the willingness of the Chinese to fund them.
Deficits do not raise interest rates or reduce private savings.
(they increase them!)
Don’t ever have to worry about not being able to sell their bonds.
(or having to offer more interest than they choose to)
Aren’t living beyond their means.
(if there is any significant level of unemployment in their economies)
Don’t lend out their reserves (Government issued Money) to borrowers.
Don’t take in money from savers (depositors) and hand it over, or lend it out, to their borrowers. *see also comment from John Armour below
Don’t ‘hold your money’ on deposit. They swap whatever you give them for their own IOUs.
Don’t grow money on trees but they can create it from nothing when they lend.
Central Banks (like the US Fed, or Bank of England) are not independent from government.
Quantitative Easing is not inflationary and does not add to Government spending. It is an asset swap.
The National debt is not like a mortgage or a car loan which has to be repaid.
Private Savings do not create investment. They can cause Government deficits!
Base interest rates are not decided by the laws of supply and demand.
Cutting spending in the public sector does not create jobs in the private sector.
The private sector and the public sector cannot both ‘tighten their belts’ at the same time.
And: the Sun doesn’t go around the earth!