Internal Borrowing and Deficit Financing | Public Finance

It is also interesting at this stage to learn the comparison between deficit financing (money creation) and borrowing. An easy way of financing gov­ernment expenditure is by money creation. There are, in fact, two ways of creating money: (1) printing money, and (2) borrowing money from the central bank. Such 'borrowing' is essentially money creation, not borrowing in the true [...]