In the comments over at Mike Norman where Mike did a fantastic piece on Bloomberg,
Roger Erickson said…
Why is it so hard to differentiate what “budget” means for the issuer and users of a “fiat” currency?
A currency issuer maintains an input/output real-products/services budget, and issues fiat currency as internal bookkeeping.
Currency users maintain local currency budgets as an accurate proxy for their local input/output budgets.
Fiat currency is bookkeeping, and the monopoly issuer is the chief accountant. It’s that simple.
There is – semantically – simply no such thing as a “deficit” in fiat.
That use of the word, fiat “deficit,” is entirely a semantic miscue.
There’s no need to even discuss the amount of numerals involved – that’s just distracting.
Even this interview – which Mike handled better than most – is extremely frustrating to watch. The interviewer obviously doesn’t have the slightest idea how a fiat monetary system actually works – and still doesn’t at the end of the interview.
Modern Money - Macroeconomics 