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xnx 2 days ago

We might be unintentionally moving to a system where paying for government is done mostly through inflation.

jfengel 14 hours ago | parent | next [-]

That's not the plan, but it's actually something economists have considered. They call it Modern Monetary Theory.

https://en.wikipedia.org/wiki/Modern_Monetary_Theory

Basically, printing money is just an IOU, so you might as well not bother with a separate "borrowing" step. If the government wants something, they issue an IOU, in the form of its own currency.

On the flip side, the government still taxes, but it's just getting back its own IOUs. Instead of pretending it's depositing those IOUs back into a bank, they just tear them up and forget them.

If your taxes match your spending, there's no inflation. The money supply remains constant. If you do spend more than you take in, you get inflation -- which is OK, if managed carefully. It encourages people to go spend their money, rather than just sitting on it.

It's counterintuitive, but it's a lot more flexible than the way we handle it now. It lets the government spend its way past crises, especially during crashes when people hold on to their money.

2 days ago | parent | prev | next [-]
[deleted]
KetoManx64 2 days ago | parent | prev [-]

This has already been the case since the creation of the Federal Reserve and moving away from the golf standard. The federal reserve gets to print money and the US government gets the first dibs on that, and the middle and lower class then get screwed shortly later by the inflation of the printing.