From inception of a monetary economy with a government-issued currency, it is clear that government spending must come before tax payments or purchases of government debt. The order of requirements is basically: (i) government defines its monetary unit of account; (ii) government imposes taxes and other obligations that can only finally be settled in that currency; (iii) government spends (or lends) its currency into existence; (iv) non-government can now obtain the currency and, among other things, pay its taxes and purchase government debt. It is clear that government spending must logically come before tax payments or purchases of government debt because non-government must be able to get hold of the currency before it can do these things…."Tax and spend is really "spend and tax" at the operationally level. The "tax and spend" illusion arises from optics that are created by failure of operational understanding.
It's the same with credit creation through bank lending. Loans create deposits. Deposits don't create loans and are not necessary for lending.
The government and banks create the unit of account simply be crediting accounts. But only the government can create entries in the payments system that is used for final settlement and settlement of obligations to the government, which are only redeemable using liabilities issued by government.
