Friday, February 27, 2015

Geoff Coventry — When good analogies go bad

We've all heard it.

"If I ran my business like the government I'd be bankrupt".

It sounds so intuitive; so moral. It would be irresponsible for a government to keep spending more than is earns. And for many governments, it really is true - all those cities, states, and the nations that do not issue their own currency (like Greece). Yep - they all have to get the money they spend because they are all users of a currency.
But what about nations that issue their own currency? After-all, that's most sovereign nations.

Let's go back to our analogy. We said if I ran my business like the government... stop right there. What business issues its own money? Businesses are currency users just like cities, but the United States is a currency issuer. In what way can a business ever run like a currency issuer?
Yep, some analogies are just bad. So bad, in fact, that they can mislead whole nations into thinking something false is true, and something true is false. Or, to put it in moral terms, they lead us to believe that something very destructive to our economy is actually the only righteous solution, and that the very thing that could help society and people is deemed irresponsible and even evil.

That's what happens when good analogies go bad....
It's the people's money
When good analogies go bad
Geoff Coventry

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