4 ms·

That's not a reason for the dollar to be worth anything. Pick any value for a dollar in terms of berries, and a 10% income tax will work out to be the same perc

That's not a reason for the dollar to be worth anything. Pick any value for a dollar in terms of berries, and a 10% income tax will work out to be the same percent of your berries taken away during the trade. Similarly, you can pick any value of the dollar and the property taxes on your forest land will come out to the same number of berries. Since any dollar denomination works, the equation can't fix a value.

jqgatsby 4y ago
IMO, that doesn't matter, and OP is correct that taxes are what really drive the pump. If you owe $10 in tax, and all you have are berries, you have to sell the berries to get dollars to pay the tax. Your desire not to go to prison for tax avoidance thus creates demand for dollars.
- whatshisface 4y ago
  You don't owe $10 in tax, you owe 10% in tax. 10% could be anything and doesn't fix a value for the dollar. The system you're describing is a dollar quota, not a tax, and I don't think that system has ever existed in a western democracy. Seriously, just try to calculate the idealized value of $1 based on a single tax, perhaps a tax you pay. There's no way to come up with anything. The theory being advanced here does not stand up to even the simplest attempt to apply it! (There might have been a cruel feudal lord that demanded one gold coin per annum on threat of imprisonment, but I haven't heard of him if there was.)
  - jqgatsby 4y ago
    It's an interesting point you are making about percentages, and I'm trying to decide if you are confused or I am. We seem to be in agreement that a dollar quota would create dollar demand, is that correct? It seems to me that once the pump starts moving, it doesn't matter whether the government charges a percent or a fixed amount. But I think I agree with you that you can't start the pump by asking for a percent. Makes me wonder if way down in the kernel code of the monetary system there's some kind of dollar quota, or alternatively if the current system booted off a dollar quota. Makes me think of a stamp tax or something like that.
    - whatshisface 4y ago
      There was never a dollar quota. They represented amounts of gold until Richard Nixon finished a process that had begun during the great depression and fully stopped honoring the right to exchange one for the other. That was the end of this system: https://en.m.wikipedia.org/wiki/Bretton_Woods_system https://en.m.wikipedia.org/wiki/Bretton_Woods_system Since everyone was already exchanging in dollars at that time their value didn't drop to zero, although it has fell a lot since then for obvious reasons. Since people don't really use dollars as a store of value on a large scale anymore (Bill Gates does not own billions of dollars, he owns billions of dollars worth of stocks land etc.) it's not as bad as it sounds.
dahfizz 4y ago
The point is that the federal government chose dollars as the way to pay taxes, not berries. The value of the dollar is decreed by the government, it's not something everyone just agrees on.
CPLX 4y ago
Incorrect. If the currency is mandated to be acceptable for all debts, then there is a relationship between the total amount of currency in the country and the total value of tradeable assets within that country. Needless to say that relationship is complicated, you can’t work it out on a napkin, but it’s a mistake to think it’s random.
kmonsen 4y ago
The point is that you need to pay your tax in dollars. This means you and everyone else need to acquire dollars to pay taxes. This creates demand.
josephcsible 4y ago
> a 10% income tax will work out to be the same percent of your berries taken away during the trade. The key point is that the government won't accept berries as payment of your taxes. You have to sell your berries to someone else for dollars, and then pay your taxes in those dollars.
- whatshisface 4y ago
  Let's work out a couple examples to clarify it. If a berry is worth $1, then a 10% sales tax on 10 berries is $1, which is 1 berry. If a berry is worth $10, then a 10% sales tax on 10 berries is $10, which is 1 berry. So what we see here is that the government is taxing 10% berry value at all the different values of a dollar.

jqgatsby 4y ago

IMO, that doesn't matter, and OP is correct that taxes are what really drive the pump. If you owe $10 in tax, and all you have are berries, you have to sell the berries to get dollars to pay the tax. Your desire not to go to prison for tax avoidance thus creates demand for dollars.

whatshisface 4y ago
You don't owe $10 in tax, you owe 10% in tax. 10% could be anything and doesn't fix a value for the dollar. The system you're describing is a dollar quota, not a tax, and I don't think that system has ever existed in a western democracy. Seriously, just try to calculate the idealized value of $1 based on a single tax, perhaps a tax you pay. There's no way to come up with anything. The theory being advanced here does not stand up to even the simplest attempt to apply it! (There might have been a cruel feudal lord that demanded one gold coin per annum on threat of imprisonment, but I haven't heard of him if there was.)
- jqgatsby 4y ago
  It's an interesting point you are making about percentages, and I'm trying to decide if you are confused or I am. We seem to be in agreement that a dollar quota would create dollar demand, is that correct? It seems to me that once the pump starts moving, it doesn't matter whether the government charges a percent or a fixed amount. But I think I agree with you that you can't start the pump by asking for a percent. Makes me wonder if way down in the kernel code of the monetary system there's some kind of dollar quota, or alternatively if the current system booted off a dollar quota. Makes me think of a stamp tax or something like that.
  - whatshisface 4y ago
    There was never a dollar quota. They represented amounts of gold until Richard Nixon finished a process that had begun during the great depression and fully stopped honoring the right to exchange one for the other. That was the end of this system: https://en.m.wikipedia.org/wiki/Bretton_Woods_system https://en.m.wikipedia.org/wiki/Bretton_Woods_system Since everyone was already exchanging in dollars at that time their value didn't drop to zero, although it has fell a lot since then for obvious reasons. Since people don't really use dollars as a store of value on a large scale anymore (Bill Gates does not own billions of dollars, he owns billions of dollars worth of stocks land etc.) it's not as bad as it sounds.

dahfizz 4y ago

The point is that the federal government chose dollars as the way to pay taxes, not berries. The value of the dollar is decreed by the government, it's not something everyone just agrees on.

CPLX 4y ago

Incorrect. If the currency is mandated to be acceptable for all debts, then there is a relationship between the total amount of currency in the country and the total value of tradeable assets within that country. Needless to say that relationship is complicated, you can’t work it out on a napkin, but it’s a mistake to think it’s random.

kmonsen 4y ago

The point is that you need to pay your tax in dollars. This means you and everyone else need to acquire dollars to pay taxes. This creates demand.

josephcsible 4y ago

> a 10% income tax will work out to be the same percent of your berries taken away during the trade. The key point is that the government won't accept berries as payment of your taxes. You have to sell your berries to someone else for dollars, and then pay your taxes in those dollars.

whatshisface 4y ago
Let's work out a couple examples to clarify it. If a berry is worth $1, then a 10% sales tax on 10 berries is $1, which is 1 berry. If a berry is worth $10, then a 10% sales tax on 10 berries is $10, which is 1 berry. So what we see here is that the government is taxing 10% berry value at all the different values of a dollar.