Before Covid the difference between income and expenditure in Italy was -67 billion (deficit), the difference exploded to -228 billion in 2020, but also in 2023 it was -153 billion. The government spoke of a deficit of 5%, but the current result is above 7%. With these hundreds of billions more, however, the governments have made a good impression, they show increased employment and GDP and there are no complaints about the economy as in the years of austerity (except obviously for those with non-indexed fixed incomes and who have suffered inflation ).
The sign -153 billion income – expenditure balance means that in 2023 the State taxed 153 billion less than it spent. Hate! Calm down, in the modern economy where one pays and marks less in his balance, another receives and marks more in his bank balance. This -153 last year was +153 billion somehow in the economy. Which in fact has improved. Do you hear it in the newspapers and on TV? No, but that’s why we write.
In fact, these billions of deficit do not disappear as you would think by reading economics professors, you find them in current and savings accounts and bank securities (ok, some of it ended up abroad for gas…). That is, even if they waste them if we want in many cases (see the “sides” of the superbonus), the money created by the deficit then appears in the bank as someone’s “savings”. (except those given to Zelensky…). And then with that money you buy BTPs and the circle closes.
This is how the public deficit works. Not as the economics professors say in the newspapers for whom it is as if the money disappeared into a hole. Instead, it is always a circuit in which credits and debts are compensated in the bank. The problem is only who the money goes to, not that there is no money. Government debt becomes a problem if it forces you to raise rates to convince the public to then buy the bonds, but since 2014 the ECB has bought 700 billion in bonds when it kept yields below 1% and no one wanted them among savers. If there hadn’t been the ECB and the euro, would you have devalued the currency? Probably, but the whole world did the same, so in reality you didn’t even devalue because you have to devalue compared to some other country that doesn’t run a deficit and everyone does.
These 450 billion additional deficit however, they explain why the economy has improved. Economics professors always talk about “productivity”, but in reality it is the money created and in circulation that counts most of all. Has productivity improved in the last three years? Obviously not with remote working. They complain about the deficits that have exploded while explaining that the economy has improved and they are not capable of making 1+1 = 2. Because it is these hundreds of billions that have moved it.