Perhaps no title of an article( by Steve Keen) better sums up our concern regarding the current state of the financial economic situation than this. As mentioned, hopefully ad nauseam, governments and households are not equal in financial terms in anyway, "if the government runs a sustained surplus, then—unless the country in question has a huge export surplus, like Japan or Germany—a financial crisis is inevitable"-without an increase in private sector debt.
Keen gets more technical than most readers may like to invest time into but here are his points(graphs included in the article):
1: A sustained government surplus requires the private sector to supply the government with a continuous flow of money
2: The sustained flow of money from the public to the government is generated by net bank lending that exceeds the size of the government surplus
3: Money velocity volatile, pro-cyclical–and declining over time
4: Deleveraging by the private sector caused the crisis in 2007-08
5: Recipe for a Depression: both government and banks reducing the money supply
6: Austerity ensured continuing deleveraging in Europe
7: (solutions)The sustainable long term situation–the government supplies money to the non-bank private sector via a deficit
Keen gets more technical than most readers may like to invest time into but here are his points(graphs included in the article):
1: A sustained government surplus requires the private sector to supply the government with a continuous flow of money
2: The sustained flow of money from the public to the government is generated by net bank lending that exceeds the size of the government surplus
3: Money velocity volatile, pro-cyclical–and declining over time
4: Deleveraging by the private sector caused the crisis in 2007-08
5: Recipe for a Depression: both government and banks reducing the money supply
6: Austerity ensured continuing deleveraging in Europe
7: (solutions)The sustainable long term situation–the government supplies money to the non-bank private sector via a deficit