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I'm not an economist. But I can see inflation being thought of as a type of tax. I'm not sure what kind of incentives that creates, and if those incentives are

• ErikVandeWater 4y ago
  Off the top of my head, some results would be: 1. No one wants to lend to your country again because you paid them back with currency far less valuable than expected 2. Nobody wants to use your currency as a means of exchange in international transactions because it can fluctuate suddenly 3. Massive redistribution of wealth from savers and lenders to borrowers (maybe a good thing on the whole, but devastating for people headed into retirement) 4. Anything (including govt. programs) that aren't indexed to inflation are suddenly far less valuable
  • ClumsyPilot 4y ago
    All of your post assumes that when government creates money, it causes inflation, and when private banks create money, it causes no inflation. No such distinction exists. Most money is created by private banks.
    • ErikVandeWater 4y ago
      I know most money is created by private banks. But that is stable (it is assumed by ceteris paribus). If a government decided to stop taxing then that would be something new.
      • ClumsyPilot 4y ago
        Is a good assumption that money created by private banks more stable than government created money? what economic mechanism provides such guarantee and what is the evidence? Private banks used to be able to print their own currency completely: in one country each bank would have different money that coupd be redeemed for gold, and wasn't backed by the government. That was very unstable. We basically stopped taxing multinationals after the end of cold war, we do have something new.