Look at the accounting equation (assets = liability + equity) and imagine a two entity economy. One is Joe (the government) and the other is Bob (private sector). Joe controls Joe Bucks, which MUST be used by Bob to pay his liabilities (taxes to Joe). Where does Bob get the Joe Bucks from? The answer is obvious, from Joe! Ok, so where does Joe (who controls Joe bucks) get Joe Bucks from? I'll let you figure that out (hint, one person's liability is another person's asset)