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> The difference between you stuffing money under a mattress and the government doing so is that the government controls the money printers and you do not. Ther

> The difference between you stuffing money under a mattress and the government doing so is that the government controls the money printers and you do not. There is no point to the government stuffing money under a mattress because it can conjure up as much money as it desires when it so desires. On the other hand, you have no much magical ability, so the situation is quite different. > And yes we are talking about fiat currencies because most currencies in use today are fiat currencies. > Government debt is not like household debt, and government saving is not like household saving. Yes, the money printers are the exclusive exception and the only factor in inflation or deflation. Taxes are not a factor any more than mattresses. I don't know if you recognize it, but you are supporting my position.

wz1000 7y ago
Taxes take money out of the economy. Government expenditure puts money into the economy. Its a basic accounting truism. The rate of inflation/deflation is proportional to the difference between the two. Think of it this way. If one day the government decides to tax 99% of the money in the economy, you have barely any money left circulating for anyone else and you get deflation(less money chasing the same goods). On the other hand, if the government decides to add a billion dollars to everyones bank account, you have too much money in the economy and inflation(more money chasing the same goods. The government can decide to put either of the policies(or anything in between) into effect at any time, it isn't constrained by its own "savings under the mattress" at any point. If there are restrictions on government action in this direction, they are legislative, not fiscal(because, again, the government is the source of all money, it can never be fiscally constrained, no more than the referee in a tennis match can run out of points to award). RE mattresses: If you owned a money printing machine, you would not be stuffing money under your mattress, because it would just take up space. You would just destroy money you do not need at the moment, and print more as and when you need it. RE cities going bankrupt: Of course, the city of Stockton doesn't control the money supply, we are only talking of entities who can issue their own currency, i.e. the federal government. This is also why Greece went bankrupt, because it doesn't control the supply of money its debt was denominated in.
- generalpass 7y ago
  > Taxes take money out of the economy. Government expenditure puts money into the economy. Its a basic accounting truism. The rate of inflation/deflation is proportional to the difference between the two. The same effect is seen with the mattresses. Your argument has no way to address this.
- generalpass 7y ago
  Also consider: why did the city of Stockton, California have to declare bankruptcy? It collects taxes, yet it couldn't pay its bills. Again demonstrating the only causal factor is the ability to control the money supply and taxes are not a control on the money supply.

wz1000 7y ago

Taxes take money out of the economy. Government expenditure puts money into the economy. Its a basic accounting truism. The rate of inflation/deflation is proportional to the difference between the two. Think of it this way. If one day the government decides to tax 99% of the money in the economy, you have barely any money left circulating for anyone else and you get deflation(less money chasing the same goods). On the other hand, if the government decides to add a billion dollars to everyones bank account, you have too much money in the economy and inflation(more money chasing the same goods. The government can decide to put either of the policies(or anything in between) into effect at any time, it isn't constrained by its own "savings under the mattress" at any point. If there are restrictions on government action in this direction, they are legislative, not fiscal(because, again, the government is the source of all money, it can never be fiscally constrained, no more than the referee in a tennis match can run out of points to award). RE mattresses: If you owned a money printing machine, you would not be stuffing money under your mattress, because it would just take up space. You would just destroy money you do not need at the moment, and print more as and when you need it. RE cities going bankrupt: Of course, the city of Stockton doesn't control the money supply, we are only talking of entities who can issue their own currency, i.e. the federal government. This is also why Greece went bankrupt, because it doesn't control the supply of money its debt was denominated in.

generalpass 7y ago
> Taxes take money out of the economy. Government expenditure puts money into the economy. Its a basic accounting truism. The rate of inflation/deflation is proportional to the difference between the two. The same effect is seen with the mattresses. Your argument has no way to address this.
generalpass 7y ago
Also consider: why did the city of Stockton, California have to declare bankruptcy? It collects taxes, yet it couldn't pay its bills. Again demonstrating the only causal factor is the ability to control the money supply and taxes are not a control on the money supply.