The Deficit Myth

It is one of the best economy books I read recently. It has completely rebuilt my understanding of the relationship between government debts, fiscal deficits, inflation, and interest rates.

Governments with sovereign currencies like the US, UK, or Australia, do not have any problem with debts in their currency. They can “print” as much money as they need. The only constraint is the inflation rate.

Taxes in that paradigm are collected not to finance the government budget, but to control inflation and a few other goals.

That’s not just the way of thinking, that’s how it actually works. But the main problem is that we are used to thinking in the household financing paradigm when we need to earn first and then spend.

The author showed that it is not what happens. And it limits our ways to grow a more prosperous and open economy for everybody.

How? Read the book.