Because presumed GDP growth eclipses the debt over time. They ran cool BILLIONS in terrifying debt in the US in WWII. Now? A billion is what a mid sized company costs.
And if you don't run any debt, it's like having zero body fat in cold climates. No insulation, and any caloric deficit causes much more severe problems.
But why does that make analogies to household finance invalid? It may also make sense for a household to take on debt if there is projected income growth.
Also, isn't the accumulation of body fat the definition of a surplus, rather than a deficit? In both cases, having run a surplus in the past provides protection for when you must run a deficit in the future.
Furthermore, are you suggesting that, a metabolic analogy is more correct than a household-finance analogy?
The Household Debt Fallacy is a specialization of the Fallacy of Composition.
1) The debt is eclipsed by GDP rise over time.
2) A government ( at least used to ) be able to very slightly weaken its currency to equalize for GDP and population growth.
3) Mild inflation acts to equalize the effects of private debt as well.
I use the metabolic analogy because the risks of no body fat and low body fat are quite different, much as the risks of mild inflation and no inflation - or more accurately, deflation - are quite different.
