My boyfriend tells me that it's a fallacy to evaluate a country's financial activities in the same way that is prudent for an individual's or a business'. Specifically he said that there is no limit to how big the public debt:GDP ratio can be while still having a healthy economy. I don't remember his exact argument, but it had something to do with reducing the real debt with inflation and other monetary policies. On the face of it this seems like some kind of Ponzi scheme, but I know less about economics that he does, and I also may be misremembering his point. Does anyone have a link to a good explanation of how (or whether) good financial management at a country level differs from at a personal level?
Well, it's complicated. But let me point out three big differences which should be enough to start you thinking about things.
First, goals. Financial management at the personal level has the goal of having (at some point in the future) more money. Sovereign governments generally don't have a goal of more money in the future. Their goals are multiple and varied ranging from "stay in power for another year" to "help the economy produce the most it can".
Second, money. Countries usually can print their own money (a big exception: the eurozon...
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