Taxes are pointless when you can print money.

[Tirivaria]

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.

There is a difference though. A small amount of inflation is considered good because it drives spending in a "use it or lose it" fashion. We have a consumer based economy so we need people to spend to drive things.

Any deflation is always bad. If you knew that your money would grow in value just by keeping it under your mattress, you would defer buying anything but the barest necessities as long as possible. Spending levels would drop and the economy would go into recession (or depression).

[Cyberowl]

There is a difference though. A small amount of inflation is considered good because it drives spending in a "use it or lose it" fashion. We have a consumer based economy so we need people to spend to drive things.

Any deflation is always bad. If you knew that your money would grow in value just by keeping it under your mattress, you would defer buying anything but the barest necessities as long as possible. Spending levels would drop and the economy would go into recession (or depression).

That's what I meant with a certain level :P I think the desired amount of inflation is like 1% growth/year here in Germany, not sure tho And while deflation in a normal system is bad, it can help to counter inflated economies. Ideally it would balance out with a slight tendency to inflation.

[mitbrandir]

(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.

If everyone has 10M because of money printing, 10 bucks isn't worth anything and prices will raise like crazy, increasing price per product and making your place in the market worse.

[Deleted]

Inflation.

I think my one-liner would've been "1930's Germany", but I suppose this will also do.

[luc54]

I think my one-liner would've been "1930's Germany", but I suppose this will also do.

That would be wrong as it happened in the Weimar republic in the 1920's (1921-1924 to be specific).

[bergmann620]

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.

Typically, inflation (or the lack thereof) is factored in to interest rates. It's part of why the base rate on a traditional savings account is effectively 0%. Rates would obviously vary, but the large unknown remains: What would the difference be between the mathematical inflation rate and the perceived inflation rate?

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.

You can target economic inequality through government programs.

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

Those costs all exist today, even without effective inflation. The real issue with inflation is making sure wage inflation is keeping up with price inflation. If, as many people on this board suggested, we had a minimum wage tied to inflation, it would.

[Yunru]

Guess what .. your paper money is wortless in reality. It holds no value.
And that was since some president got the idea to move away from gold standard.

If you wanted to change your paper money for your country gold you would get NOTHING!
Its so wortless.
Well gold is wortless too, but its stil shiny.

Bitcoin is a good example.

[bergmann620]

If everyone has 10M because of money printing, 10 bucks isn't worth anything and prices will raise like crazy, increasing price per product and making your place in the market worse.

If everyone has 10M, 10 bucks doesn't need to be worth anything.

Think of it in terms of WoW's stat inflation.

[Ammeg]

What is the difference between collecting X% of the GDP in taxes, and simply printing X% of the GDP to pay for the expenses of the government? We pay our taxes in made-up paper money that has virtually zero intrinsic value. Why does it matter if we give the government some of it back, or if they print their own?

Well if we just simply printed money then we would face hyperinflation, like that which occurred during the 1920's in German within the Weimar Republic, when the then currency which was the Reichsbank mark took a rather nasty turn when the government decided to help pay off their reparations for the first world war by simply printing more money.

To help illustrate that in an actual manner that may seem easier to understand for those who do not know about the Weimar Republic, I shall show you this graph:

[Stonecloak]

Guess what .. your paper money is wortless in reality. It holds no value.
And that was since some president got the idea to move away from gold standard.

If you wanted to change your paper money for your country gold you would get NOTHING!
Its so wortless.
Well gold is wortless too, but its stil shiny.

Bitcoin is a good example.

While I agree with you. It's kind of futile to say otherwise right now. It's so deeply engrained into people's psyche. At humanity's next go people will learn.

[MrHappy]

because economics 101

[Lysiander]

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

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

You realy want to read some history before insinuating things like that. Short answer, the entirety of WWI early involved nations had working economies prior to the war and relatively working economies during the war. Germany's economy was damaged by the british blockades and destroyed by the terms of the Treaty of Versailles. Fancy fact: without WWI breaking the european economies, the US economy would have been *a lot* weaker in the past and likely today. The diminished trading capabiliities of the european nations due to the war is what stimulated the US economy to its early century glory.
(There was impressive growth prior to WWI, but it was WWI that established the US as a superpower because it stimulated growth without destroying parts of its infrastructure as it did for all other involved nations.)

Regarding the original question: You need to stop thinking of money as something static and start to think of it as a medium representing purchasing power. In very simplified terms it goes like this: You salary is a percentage of the economy's wealth that allows you to purchase an equal percentage of the economies production. (Ignoring import/export for a moment) This is called purchasing power. If the goverment prints money, the number of on your financial statement changes but your purchasing power stays exactly the same.

For completeness sake, your employer is highly unlikely to actually raise your salary just because the goverment prints money, which basically means that if the government prints money, your employer pockets the difference and you now have LESS purchasing power because prices usually adjust faster than salaries do. Or in short: If the government taxes you instead of printing money, it's actually doing you a favor.

No offense, but you really want to read up on the basics of economics and history before making claims like that.

[Mukki]

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.

It's not just the penny. Nickels, quarters, dimes are in the same boat. The value of the dollar has been on a fairly consistent downward spiral for quite some time, though. The real question is how do we combat inflation? WTB fiscal Stat Squish.

[Zarc]

(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.

Inflation is the answer tho, how is prices on goods and services increasing by 20% on a yearly basis easier than just taking 20% through taxation? Your point is that it would be easier to just do it that way, but the cost for businesses to constantly have to adjust their prices to keep up with that level of inflation seems a lot harder than just having the taxation system we currently have. (And this is my sentiment from just humoring your essential point, disregarding all other obvious arguments against your idea such as how debt held in foreign currency would rapidly increase in real value as the value of the currency plummets).

[openair]

Think of it in terms of WoW's stat inflation.

No. Think of it in real life terms. Not simulated, programmed, results can be whatever the programmer desires.

In your op you call it "made-up paper money that has virtually zero intrinsic value." Intrinsic value is questionable. It may not have naturally occurring value, but it does have essential and inherent value (words used in the definition of intrinsic).

To understand why just printing more money is not a good idea, you need to understand money stop pretending it is worthless. Simply put: money is the middle man in the barter. Money allows you to exchange what you provide society for what you want and need. That is why it has value above virtually zero and why simply printing more and driving up inflation is not a solution.

Before money, someone would either eat only the food they grew or trade, for example, some of their veggies for some different veggies, or some eggs, or some meat. Or they crafted stuff to trade for their food. They would drag, carry, tow their extra stuff to someone else's house or spend most of a day in the market looking for ppl who wanted to trade what you wanted for what you had.

Now apply that to today... How does someone who works for a company like ford get paid without money? Does ford give every employee one car a year? Do they give certain employees 1.5 cars a year? How do you give someone half a car or do you have to bridge that gap of an entire car to get any raise at all? Who decides which employee gets which model? And now every ford employee has to find someone to buy their free car or they go hungry for an entire year with a useless car they didn't even want.

'Oh, but ford can just give every employee some of the food ford received from the trading of their cars instead.' So ford is installing industrial refrigerators so they can store all this food before they divide it among their employees.

Or imagine something like office or Hollywood work. With no money, no middle man, these companies that don't produce anything tangible, only provide services will also need somewhere to store all they receive in trade before dividing it amongst their employees again. And who decides who gets what? Your company and boss tells what choices for food you have? No thanks.

Money allows you to exchange what you provide society for what you want and need.

[satimy]

IIRC Paul Krugman and other keynesians wanted to print trillion dollar coins to pay off the debt


edit; so while the answer may seem obvious, it isn't to some.

[Pickynerd]

So many people just don't even understand the basics. It's quite sad, really.

Some people are young and dumb, still think money magically appears out of nowhere, or that their parents make 14k a week.

[Masark]

The real question is how do we combat inflation? WTB fiscal Stat Squish.

1. You can't really, you can only keep the rate within reason. Attempting to eliminate inflation does bad things, as Canada learned when Mulroney tried it.

2. It's called a redenomination.

[Annoying]

(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.

If you make 100k a year, and pay 20k of it in taxes, you're making 80k net every single year.
If you make 100k a year, and every year, it becomes 20% less valuable, after the first year, your 100k is worth 80k. After the second year, you "make" 64k. Third, 51.2k. Tenth, 10.7k. Your employers would have to continually raise your salary by larger and larger amounts every year to maintain the 80k.

One's linear, and the other is non-linear.

[Adam Jensen]

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

Then he went and started WWII and murdered over 6 million Jews but we've all got faults.