Other People's Money
Throughout our lives, we make payments (expenses) for the goods and services we need and, in turn, get paid (income) for those we offer to others. Whether you are talking about people, organizations, companies, entire communities or states, the same forces are at work and I’ll be referring to them interchangeably in this article. Their collective activities generate constant flows of money, goods and services and constitute the fundamental dynamics of our economies at every level. It is part of what’s referred to in economics as the circular flow of income. The main enabler of these transactions is money and, in any particular period, we always hope to bring in more money than we pay out in order to stay solvent. Everyone works vigorously to ensure that the balance in the flow of money (cashflow) always favours them i.e. they want to have a surplus of income over expenses in any given period. But, alas, it is usually not possible to sustain such a positive cash bala...