Dinero, having pointed out quite correctly that "There is no objective reason to give a special status to the government. That is political view not an accounting view" then went a step too far:
Governments don't issue currency. It's a myth.
No, they do and it's not a myth.
Currency is mainly deposits that are created by the credit system and governments borrow deposits that allready exist i.e. the Bond market.
Private sector borrowing comes first in the process creating deposits then the government taxes or borrows those deposits.
Again, nope.
The general rule that "loans create deposits" applies to the government just as much as it does to banks or anybody else.
Borrowing money, taking out a mortgage, printing notes, minting coins, running up credit, issuing currency or signing IOUs, leaving bills unpaid etc. are all shades of the same thing and there are the same two sides to each of them - the issuer/borrower has a financial LIABILITY and the holder of the mortgage, bank notes, bank deposit, IOU etc. has a financial ASSET. It always nets off to precisely zero.
So the government can pay people with coins and notes, bank deposits, new bonds, or simply pay a supplier over an extended credit period. It is all shades of the same thing. It does not need to borrow a penny beforehand. It is the expenditure which creates the liability and asset, collectively referred to as "money".
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As a quite separate matter, having printed or issued currency, the government also claws back or unprints money by collecting taxes (to prevent price inflation and to regulate/meddle with the economy).
Consider - the government could collect taxes in cash and then distribute the same very same physical cash to its employees, suppliers and pensioners. Or it could pay out with freshly printed and minted cash, then collect taxes in physical cash and throw the bank notes in a furnace and melt down the coins.
It makes absolutely no difference. Indeed, the government could do one without the other, or more of one that the other.
Debate Magazine
