The Government-Household analogy refers to rhetoric in political economic discourse that compares the finances of a government to those of a household.
Economist and Nobel laureate William Vickrey, stated in 1998:[3]This fallacy seems to stem from a false analogy to borrowing by individuals.
This added purchasing power, when spent, provides markets for private production, inducing producers to invest in additional plant capacity, which will form part of the real heritage left to the future.
Deficits in excess of a gap growing as a result of the maximum feasible growth in real output might indeed cause problems, but we are nowhere near that level.
If General Motors, AT&T, and individual households had been required to balance their budgets in the manner being applied to the Federal government, there would be no corporate bonds, no mortgages, no bank loans, and many fewer automobiles, telephones, and houses.Economics terminology that differs from common usage