Taxes are pointless when you can print money.

[Obelisk Kai]

Just read this

http://www.theonion.com/articles/us-...es-money,2912/

[bergmann620]

Germany tried the same thing after WW1.

Of the examples we've had, did any of them have functional economies before their inflation?

- - - Updated - - -

We are on a standard. The dollar is worth x Euros, y Yen, etc. and a % of the US GDP.

That's odd. Every day, those exchange rates seem to change. Is that what passes for a standard?

[Deleted]

Of the examples we've had, did any of them have functional economies before their inflation?

Nope, they were all fucked but printing more money fucked them even more, it took Hitler to fix Germany.

[Rukentuts]

That's odd. Every day, those exchange rates seem to change. Is that what passes for a standard?

That's because each country has its own inflation rates and economic activity that changes them.

If society collectively wanted to adopt a new currency (includes revalue) it wouldn't be smooth but has been done. It wouldn't change how the economy works though.

[Knough]

The problem is thinking of money in terms of nice conventient bubbles of goodness, like Malteasers, or M&Ms.
If there are 100 M&Ms (money), and 10 people (economy), and one extra Dog who needs 20 M&Ms (tax, 20%), it would be best to steal 20 more.
Then everyone has 10 M&Ms, the dog has the twenty it needs, and stealing (printing more) is free.
Hooray for everyone!
But money, sadly, is not M&Ms, and doesn't work like them.
If you have 100, and people, and the greedy dog, and then print 20 more;
All the people have 10, and the dog has 20.
Looks good so far.
But 10 is no longer a tenth (10/100) of the economy, it's a twelth (10/120), so it's worth less.
This is the complex bit I don't get fully, the only way it can tie in with M&Ms is if we imagine that regardless of how many M&Ms we say there are, there's only a certain amount of chocolate (worth of economy/labour/etc), so even if we print 100 more M&Ms, they simply have half as much chocolate (actual worth).
Again, this isn't too bad, before (after dog-tax), people had (8/100) (almost the same).
But next year, the Evil Capitalist Dog Overlords print more! They need tax equal to 20%, so this time they print 24 M&Ms.
And the next year, 28.8.
The people get to hang onto their 10 M&Ms, which after ten years, will be 1/62nd of the economy, a whole lot less. (The people will probably gain more money than the 10, due to the massive change in economy, but it won't keep up with the inflation (inflation; evil dog M&Ms printers.))


But if you let the kind perfect angelic dog have 20 M&Ms, those sneak back in, through funding, benefits, healthcare (in some places), and civil service, not paying taxes and losing arts funding for a college in the opposite coast doesn't sound too bad. Losing the police, or.. I dunno, cats, in this metaphor, isn't such a good deal.


TL;DR
Praise be the dog-M&M thieves.

[zEmini]

I think the basic cycle goes something like this.

1. Government ask for a loan from the fed.
2. Fed reserve prints out the cash.
3. Government uses that money to pay its bills.
4. Interest is generated on the debt
5. Taxes pay back the interest
6. Repeat and debt continues to grow indefinitely or until the Dollar collapses.

This keeps hyperinflation in check.

Otherwise confidence in the dollar would crash.

[Deleted]

Because then you start trading bags of money instead of single notes. Soon the other economies in the world doesn't want anything to do with your currency and it becomes effectively worthless.

Money doesn't have any inherent value at all. Its value is merely decided by the trust that people have in it being useful for acquiring goods and services.

[v2prwsmb45yhuq3wj23vpjk]

It's why most of them just used the money as fuel for fires.

It's almost like the situation the US penny is in. Ignoring the whole federal crime thing, I could melt down a penny for its copper and gain more value than a cent.

Only older pennies. Newer pennies the metal isn't worth it. Even older pennies it's not worth it unless you're doing a fucking lot simply because the investment into a forge and the time/materials spent melting them.

[Stormdash]

Printing money to solve problems is sort of the prevailing fiscal policy unfortunately -- even while we go right along collecting the taxes... and finding new and more vigorous ways to assess them (you probably could build a house in the middle of the desert now and still be building in a federal flood insurance zone nowadays; mandatory flood insurance is a de facto tax). I heard the question asked rhetorically, and it made me laugh, if we are able to print up money to pay for whatever programs or benefits, why can't we just write a check for the full accounting liability of the sovereign debt?

[l33t]

(And yet, we're told that inflation doesn't matter when we print money now.)

I don't see how "Your money is theoretically worth 20% less" is that much different (or worse) from "You have 20% less physical money in your hand."

Are you arguing that inflation would run rampant and exceed the (mathematical) 20% inflation this could potentially cause (assuming we funded the government at current levels relative to the GDP)? If anything, general apathy toward policy amongst the populace would result in real inflation being lower than the mathematically correct level of inflation.

It's not like we're on a standard- a dollar is worth what 'we' think it's worth.

One thing you have 20% less money. Another thing is everything costs 20% more. These things are not the same.
If anything, taxes should be variative. I.e. if you are rich, you pay 60% taxes, if you're mid, you pay 30% taxes, if you're poor, you pay 5% taxes.

[Dethh]

It's why most of them just used the money as fuel for fires.

It's almost like the situation the US penny is in. Ignoring the whole federal crime thing, I could melt down a penny for its copper and gain more value than a cent.

As long as the penny was made before 1982.

[Stonecloak]

I think the basic cycle goes something like this.

1. Government ask for a loan from the fed.
2. Fed reserve prints out the cash.
3. Government uses that money to pay its bills.
4. Interest is generated on the debt
5. Taxes pay back the interest
6. Repeat and debt continues to grow indefinitely or until the Dollar collapses.

This keeps hyperinflation in check.

Otherwise confidence in the dollar would crash.

Yes it is. It's just when the gov. takes out a loan from the reserve to bail certain people out that made terrible decisions that it becomes a stupid system, because now the people are responsible for that. I can relate to the argument that the fed reserve should've never existed, because every dollar is tied to debt.

[Bakis]

It's why most of them just used the money as fuel for fires.

They moved from money to books for a short while

[l33t]

How do you think it currently works?

In my country it does not work that way, sadly. Even if it worked suddenly that way, our rich would just cheat system and still pay taxes like they're poor. People become rich not because they're smart or something. People become rich because they cheat the system.

[Tirivaria]

Taxes are what drive demand and stability for the currency. You wouldn't need US dollars (or insert your national currency) if your government didn't require you to periodically give some of it back.

That's the fundamental difference between government backed currencies and crypto-currencies like Bitcoin. I can't really function in the US economy without US dollars. Either I will incur some tax obligation that can only extinguished with US dollars or even if I can avoid taxes myself, all of the businesses supplying me with goods and services cannot. They may accept multiple forms of currency for payment, but on will always be the government currency because that is what they need to pay taxes. On the other hand, I don't need Bitcoin which is why a large portion of the people who hold Bitcoin are doing so only for speculative purposes. That makes the value highly unstable which makes it less usable by the average person as a store of value and medium of exchange.

Also a side note on hyper-inflation: Every historical instance of hyper-inflation was instigated by a supply side shock. Too much money chasing too few goods. The government printing money after the fact certainly didn't help, but it wasn't the printing of money that created the situation in the first place. What governments need to do in response to a supply contraction is the difficult task of pulling money out of the economy to rebalance the ratio of goods to currency.

[Time Sage]

Basically printing more money devaules existing money AND the new money, that's why they don't do it.

[Cyberowl]

This is like the most basic economical knowledge after supply and demand. Inflation and deflation are both unhealthy for the economy if they reach a certain level.

Just imagine you saved 200k for a house and within months it loses all its worth? Certainly sounds worse to me than paying taxes >.>

[Tirivaria]

Printing money to solve problems is sort of the prevailing fiscal policy unfortunately -- even while we go right along collecting the taxes... and finding new and more vigorous ways to assess them (you probably could build a house in the middle of the desert now and still be building in a federal flood insurance zone nowadays; mandatory flood insurance is a de facto tax). I heard the question asked rhetorically, and it made me laugh, if we are able to print up money to pay for whatever programs or benefits, why can't we just write a check for the full accounting liability of the sovereign debt?

We can. Or rather we can mint the coin. Google platinum coin seigniorage. It's twisting the law a bit but as far as anyone can tell, perfectly legal.

[ThePants999]

I don't see how "Your money is theoretically worth 20% less" is that much different (or worse) from "You have 20% less physical money in your hand."

Technically, you sort of have a point. However:

1. Making everyone's money worth less creates some perverse incentives for everyone that governments won't necessarily want to set up. For example, with high inflation it's a really bad idea to have cash savings. You'll penalise everyone who's saving for their retirement, for example, to benefit those who have put all their money into their house.

2. You can't target inflation. You'll hit the poor just as hard as you hit the rich. No personal allowances, no tax bands, just 20% on everyone.

3. Inflation carries extra costs of its own. The need for companies to constantly revise prices, the uncertainty about the future, yadda.

[Deleted]

Because printing more money than necessary is like peeing your pants when it's cold:

At first it will feel nice and warm...

...But soon after it will get cold, stick and nasty

It would cause inflation, and people would lose trust in the currency, which honestly is all that keeps out economy stable: Trust in our currency.