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> The government is supposed to work by collecting taxes and then spending these taxpayers dollars. Not by printing? Where are those taxpayers dollars coming f
by pwinnski 4y ago
> The government is supposed to work by collecting taxes and then spending these taxpayers dollars.
Not by printing? Where are those taxpayers dollars coming from before they're collected, if they were never printed? Once printed, how is new money moved into circulation? Answer:
The government prints money, which it then distributes into the economy via government spending. It then collects taxes to remove money from circulation.
Your suggestion is the common understanding, but that leaves no room for how the whole cycle starts before money has been printed, and seems to reverse the order of events.
- taxyz 4y agoYou skipped the part about the Federal Reserve and how its supposed to be semi-independent from the spending of the government - i.e. the government cannot print money but the federal reserve can to fund its operations in the form of buying bonds/securities/etc. Also the government does not distribute the money via government spending. The Federal Reserve distributes the money and it can do so even without the government by purchasing bonds from the private sector. Your suggestion is actually the common misunderstanding and it reverses the responsibilities of various institutions in such a way that most people feel they are subjects of their government. Small update: collecting taxes doesn't remove money from circulation either. Ay-yi-yi, people are misinformed.