Modern governments with their own Fiat currencies don’t use taxes to pay for anything. The money doesn’t get distributed, it gets destroyed to control inflation.
It really is how this works.
It’s just that nobody realised until the last couple decades. And now we have a century of inertia behind economic theories that say otherwise. A century of economic theory that’s been horrible at predicting the real economy by the way.
But it’s not difficult to understand.
If a government can make money out of nothing to pay for anything it needs to (the definition of fiat currency), then it doesn’t need to collect taxes to pay for things. If it doesn’t need to taxes to pay for things, then what do taxes do? Taxes remove money from the economy, offsetting the money added by government spending from nothing. This is direct inflation control.
You’re onto a piece of something, but it’s a partial truth that you’ve perhaps over generalized.
To your point, America is exporting it’s inflation globally so it can buy things with money it doesn’t have. I also agree to your point that neoliberal economics, especially how it is discussed in public through western (American) & billionaire owned media and government is a sham. This is some of the kernel of truth you speak of.
You overstate your case when you talk about taxation and economics as a whole. Don’t throw the baby out with the bathwater just because someone else shit in the tub.
Do you mean inflation as increasing prices?
Or increasing money supply?
I’m not sure either matters realy, as the USD is the global currency. Foreign and domestic together, are a single economy from point of view of the USD.
That’s it! You answered your own question. Because it’s the global reserve currency, it can inflate its money supply and gain the domestic benefits of money for nothing, but the negative impacts of “relatively more dollars chasing relatively fewer goods” are diluted among all global economies using the USD.
It’s a limited and temporary advantage. As the world is finding out the hard way, any dealing with US assets now poses incalculable geopolitical risks. Not just from losing the defacto reserve status, but both from abandoning the rule of law for autocracy as well as from disruptive warmongering, tarrifs, broken deals, loss of trust and the inability to bargain in good faith.
Nothing inherently wrong with taxation. The problems are how taxes are determined, how they’re collected, and how that money is distributed.
Exactly. Conceptually, taxation isn’t left, but the way some governments use those funds absolutely is theft.
Not to mention how angry people are about taxation, but are also completely unaware that conceptually, profit is actually left of your surplus value.
Modern governments with their own Fiat currencies don’t use taxes to pay for anything. The money doesn’t get distributed, it gets destroyed to control inflation.
Not how that works. Not how any of that works.
It really is how this works.
It’s just that nobody realised until the last couple decades. And now we have a century of inertia behind economic theories that say otherwise. A century of economic theory that’s been horrible at predicting the real economy by the way.
But it’s not difficult to understand.
If a government can make money out of nothing to pay for anything it needs to (the definition of fiat currency), then it doesn’t need to collect taxes to pay for things. If it doesn’t need to taxes to pay for things, then what do taxes do? Taxes remove money from the economy, offsetting the money added by government spending from nothing. This is direct inflation control.
You’re onto a piece of something, but it’s a partial truth that you’ve perhaps over generalized.
To your point, America is exporting it’s inflation globally so it can buy things with money it doesn’t have. I also agree to your point that neoliberal economics, especially how it is discussed in public through western (American) & billionaire owned media and government is a sham. This is some of the kernel of truth you speak of.
You overstate your case when you talk about taxation and economics as a whole. Don’t throw the baby out with the bathwater just because someone else shit in the tub.
I don’t understand.
Do you mean inflation as increasing prices?
Or increasing money supply?
I’m not sure either matters realy, as the USD is the global currency. Foreign and domestic together, are a single economy from point of view of the USD.
That’s it! You answered your own question. Because it’s the global reserve currency, it can inflate its money supply and gain the domestic benefits of money for nothing, but the negative impacts of “relatively more dollars chasing relatively fewer goods” are diluted among all global economies using the USD.
It’s a limited and temporary advantage. As the world is finding out the hard way, any dealing with US assets now poses incalculable geopolitical risks. Not just from losing the defacto reserve status, but both from abandoning the rule of law for autocracy as well as from disruptive warmongering, tarrifs, broken deals, loss of trust and the inability to bargain in good faith.
Yah… That’s econ 101 stuff I’m not and haven’t been confused about that. Not sure how that’s ‘exporting’ inflation.
I don’t understand what you’re trying to say.
I’m not sure you understand what I’m trying to say.
You:
Me:
Taxes don’t remove money from the economy, it’s just a way the money circulates through it. Taking a loan and paying it back isn’t removing money.
That’s the old economic model that treats a government like any other organization in the economy. It’s not.
Taxes aren’t loans. Banks aren’t governments. Completely different and uncomparable.
The difference is banks don’t control their own currency. That single difference changes everything.