ABSTRACT
The government can consistently issue more IOUs than it claims back in taxes. This is known as the government's deficit. A massively important difference between the government's issuance of IOUs and that of private bodies, especially banks is noted. We have seen that they do not need to redeem all their deposits for currency. The banks, we have seen, are limited in their issuance of deposits, or at least dependent on the central bank, because of their fixed exchange rate system. We can now understand how the lending of money works in the modern economy, determine how far our reasoning in the close-to-home cases can legitimately be extended to cases of government deficit spending and bank lending, and, finally, learn how to apply the Hume-Anscombe argument within the current system. But in the end, it makes the laws and can repeal them whenever it wants.
