The world’s most simple national debt and deficit explanation.
Written by: Dr. John Harvey
Adapted and Animated by: Tschäff Reisberg
Original Text: http://rommeldak.wordpress.com/2010/1…
To learn more about inflation and what we have to fear see:
Mosler’s $100M bet that government can’t go bankrupt:
This analysis applies to any sovereign, fiat, non-convertible, floating exchange rate currency issuing federal government such as Canada, Mexico, Japan, Singapore, Australia, and England not currency using governments such as California, Greece, Estonia, or Venezuela. For the government to run a deficit (a flow), it spends more than it taxes. National debt (a stock) is the accumulated deficits for a nation. For a currency issuing government to tax or borrow, it must first issue the currency. The national debt is equal to all government spent into the economy and didn’t tax away- the combined savings of everyone in the economy. The only way to eliminate the national debt is to drain the all savings from everyone in the economy. As one can imagine this would have disastrous consequences for the economy.
Thanks to Egahen for the walnut image and Adi007 for the people and city.