Riddle: When is a ‘deficit’ not actually a deficit?
Answer: When it’s a Government budget deficit.
Dear [insert name of virtually any Journalist or Politician]
It seems that you’re still having a bit if a struggle to understand what a budget deficit is, and what it does.
Let me try and explain.
Imagine that I’m the ‘Government’ and you are the ‘Private Sector’. I give you a bar of chocolate. Now, I (the ‘Government’) am in deficit to the tune of one bar of chocolate… but you (the ‘Private Sector’) are in surplus to the sum of one bar of chocolate.
Are you with me so far? The government sector and the private sector or non-governmental sector, are opposite sides of the same coin. A deficit for the government means a gain in the private sector and vice versa. (The private sector means everything in the domestic economy, which is…
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