Russell Coker wrote:
Perhaps it could be added that unlike the budget of a person, household or ordinary company, where a deficit is unconditionally undesirable; the budget of a government, particularly a national government, in some ways resembles a bank. Where the business model is not zero deficit; rather the idea is to have maximum 'borrowings' (the depositors funds); and to maximise lendings of those at as high a differential rate as possible. In the case of a normal national government, which can't just print money to cover the deficit (eg 'quantitative easing' in the USA), they must issue bonds (ideally at the lowest rate possible). Apart from the provision of services, I would imagine the aim would be to spend money where possible, in ways that would maximise economic returns and thense tax revenue, with respect to the cost of the interest on those bonds ? regards Rohan McLeod