Debts, deficits and slow growth

Deficit financing, on the other hand, creates money to spend without first bothering to produce the goods and services the money is supposed to represent. Since this fake money is identical to the real thing, its existence first dilutes the value of money. And then, secondly, because this money is always spent by governments in the first instance, the pattern of production is changed from what the market prefers to what the government prefers, which inevitably lowers the productivity of the economy. Debt, deficits and slow growth are therefore inevitable.

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Source: http://www.iea.org.uk/blog/debts-deficits-and-slow-growth

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