How does the economy “grow”? Where does the new money comes from?
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New money comes from govt spending.
Any time a currency issuing govt spend, they do so by increasing the balance within the relevant account. At the central bank, they have the unique ability to do so without decreasing the balance of another account. Similar to going into Excel and changing the value of a field. Its just keystrokes on a computer at the central bank.
Tax removes money from the economy, but does not fund govt spending. Most people think their taxes directly fund things but they are wrong. Taxes are simply deleted. Your account is marked down but that doesnt go anywhere. Tax does have an important role to play in the economy, its just not the role most people believe it has. But thats perhaps a seperate essay. Or a visit to Richard Murphys blog.
When the govt spend more than they tax, we call this the deficit. This word has very negative connotations, but simple book keeping says that wherever there is a deficit, there must be an equal surplus (your £1 deficit at the shop = £1 surplus for the shopkeeper).
The govt deficit = the pvt sectors surplus. Thats us. Thats where new money comes from.
Source: The Deficit Myth by Stephenie Kelton
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