Funding the Future Governments aren't like households
Feb 23, 2026
A clear challenge to the idea that governments must budget like households. Explains how state money is created and why spending can precede taxation. Reframes bond sales and shows how deficits can boost private savings. Identifies real limits—resources, skills, energy, environment—and argues for resource-guided public investment and care-focused policy.
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Government Creates Money Before It Taxes
- A currency-issuing national government is the opposite of a household and can create money by spending before taxing.
- Richard Murphy explains the Bank of England records government spending as money creation and taxation reclaims that money to control inflation.
Household Analogy Was Built To Justify Austerity
- The household budget analogy is a deliberately misleading political myth used to justify austerity and shrink government.
- Murphy argues it was crafted to promote neoliberal policies and weaken public services since 2010.
Taxation Reclaims Money To Manage Inflation
- Taxation's primary purpose is to remove money the government has already created to prevent inflation, not to 'fund' spending.
- Murphy stresses spending must come before taxation because otherwise there is no money to settle tax liabilities.