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Let’s pretend you want to buy a car for $50,000, but you only have savings of $20,000, so you will need to finance the other $30,000.

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Now, let’s assume the savings were accumulated from your previous after-tax earnings since your cumulative household expenses were less than your cumulative earnings, and that the interest-bearing financing can be obtained from a bank or other lender, often through a vehicle manufacturer’s factory financing arrangements.

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If you understand the above example, then you understand the basic accounting equation that was developed more than 500 years ago: assets equal liabilities plus equity. In other words, assets are always acquired with equity (accumulated net earnings) or liabilities.

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In the business context, equity can also include shares or other instruments issued for money, but individuals and governments do not have an equivalent concept.

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In the above example, the asset is the $50,000 car and it was acquired with equity of $20,000 and new debt of $30,000. Easy to understand.

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With that in mind, I couldn’t help but take issue with Mark Carney’s marketing phrase, “Spend less, invest more.” He even put out an elementary-level video to try to explain that simple expenditures (such as utilities for your home) have no lingering benefit, whereas a house purchase does and is thus an asset. Good grief.

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Expenditures are part of calculating equity. In other words, if your current expenses are less than your current income, then you can accumulate savings and/or equity. If your expenses exceed your income, you have a deficit and you need to find a way to pay for those expenses (usually debt, or you can use any existing equity or savings).

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Got it so far? Good. You will therefore understand that recharacterizing spending as expenditures or investments is an old, misleading marketing gimmick since it conveniently ignores how such overall spending (whether it is expenditures or investments) will be paid for.

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If you want to recharacterize expenditures to assets, well, OK. But that ignores the other side of the accounting equation. How will it be paid for? In a government context, the answer is easy. If current taxation revenues don’t keep up with such expenses or investments, then debt will increase.

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Earlier this year, Carney said he would change the way that government budgets are reported by separating them into operating expenses and capital. This is a deceptive style of reporting. If a government is paying for operating expenses or capital, it had better have cumulative or current net earnings. If not, it will acquire such assets or pay for operating expenditures with debt.

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Accordingly, ask yourself if the “spend less, invest more” phrase makes sense. If it does, you’ve invented a new accounting equation and should write accounting textbooks for a living.