One of the most erroneous but least contested theses frequently voiced in Latvia's public discourse is the assumption that rising public debt and an annual national budget deficit are inherently undesirable. There is a deeply rooted prejudice that government borrowing diminishes future development opportunities because future generations will have to suffer a higher tax burden to repay ever-increasing interest on that debt. This perspective can be understood rationally – despite it being flawed.

Firstly, there is a prevailing view in both political circles and the wider public that a state budget and a household budget are functionally identical. If household expenditure consistently exceeds income, then a serious risk of insolvency does indeed exist. However, the state budget functions according to different principles: government spending translates into household income (and therefore your own), and the insolvency of the Latvian state would be such an existential threat to the entire European monetary union that it is not considered a serious risk.

Secondly, the reason for the intuitive belief that public debt is a problem rather than a solution relates to the semantic framework of the word "debt". Being in debt means being dependent on the goodwill of others. It seems logical that it is wiser to avoid any dependency, as political and economic freedom are, after all, associated with independence and sovereignty. However, this assumption is just as flawed as the household budget analogy. In reality, "public debt" denotes the democratically controlled amount of money in the economy. Money as a medium of exchange can be created in two ways: privately (for example, in credit institutions) and publicly. If the right to create money is transferred solely to private institutions, they are granted the power to decide for what purposes money will be created (for example, real estate transactions). Conversely, if money is created by public institutions (for example, the state), then, at least in a legal sense, decisions regarding the spending and distribution of money are determined democratically. It is important to keep in mind that "debt" will exist in any case: the only difference is whether that debt is private or public.