Inflation as the only tax

[Peppersmak]

Imagine the following. There is no taxes, no duties, no sales tax etc.
All government spending that is everything on the governments budget is covered by printing fresh money creating inflation.
There would be no need for tax returns, tax lawyers, tax workers, tax evation would become impossible.

Could this work with a responsible government?

[Greed and Death]

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

John Maynard Keynes
I would say yes, it is an indirect tax on the people for the benefit of the banks.

[Lauchlin]

It's exactly the same thing. It's like saying, "Instead of subtracting five dollars, how about we add negative five dollars?"

[Peppersmak]

It's exactly the same thing. It's like saying, "Instead of subtracting five dollars, how about we add negative five dollars?"

There is no overhead in the collection of an indirect tax like this one.

[Hydesland]

It's exactly the same thing. It's like saying, "Instead of subtracting five dollars, how about we add negative five dollars?"

There is no overhead in the collection of an indirect tax like this one.

http://en.wikipedia.org/wiki/Seigniorage

[Sufforia]

Zimbabwe and Weimar tried it..Not a good idea, due to the fact that the currency basically becomes worthless.

[Galloism]

It's exactly the same thing. It's like saying, "Instead of subtracting five dollars, how about we add negative five dollars?"

There is no overhead in the collection of an indirect tax like this one.

Printing and coining costs come to mind.

[Peppersmak]

Zimbabwe and Weimar tried it..Not a good idea, due to the fact that the currency basically becomes worthless.

My question is if it can be done with a responsible government that takes inflation very seriously.

[Peppersmak]

There is no overhead in the collection of an indirect tax like this one.

Printing and coining costs come to mind.

It could be as easy as adding the money electronically. Printing actual physical currency is just needed for the amount of the money supply that circulate physically.

[Greed and Death]

Printing and coining costs come to mind.

It could be as easy as adding the money electronically. Printing actual physical currency is just needed for the amount of the money supply that circulate physically.

Then you got to pay a data entry person.

[Coccygia]

Are you totally out of your mind? I am just wondering...

[Peppersmak]

It could be as easy as adding the money electronically. Printing actual physical currency is just needed for the amount of the money supply that circulate physically.

Then you got to pay a data entry person.

nitpicking, let's just say taht the overhead would be minimal.

[Great Nepal]

Do you really want something like this?

or

[Geilinor]

Printing money to fund expenses? That would result in disaster. Heard of hyperinflation?

[Greed and Death]

Then you got to pay a data entry person.

nitpicking, let's just say taht the overhead would be minimal.

Also right now there is a cost because the fed reserve rate (for banks) is less then what then inflation. Banks are basically getting paid to borrow from the fed reserve.

[Peppersmak]

Printing money to fund expenses? That would result in disaster. Heard of hyperinflation?

The question is does it need to create hyperinflation? If the budget is only a small fraction of the money supply then it should not mathematically create hyperinflation.

Let us say that the total amount of currency at time 0 is : 20 trillion dollars. And the budget is: 2.4 trillion, if this money is not collected but simply created out of thin air, it should only create an inflation of 12%. Something that would become an indirect flat tax without to much overhead. 12% is not hyperinflation.

[Peppersmak]

nitpicking, let's just say taht the overhead would be minimal.

Also right now there is a cost because the fed reserve rate (for banks) is less then what then inflation. Banks are basically getting paid to borrow from the fed reserve.

Intrest rates would probalby be kept at the same level or higher than the inflation.

[Cosmopoles]

The question is does it need to create hyperinflation? If the budget is only a small fraction of the money supply then it should not mathematically create hyperinflation.

Let us say that the total amount of currency at time 0 is : 20 trillion dollars. And the budget is: 2.4 trillion, if this money is not collected but simply created out of thin air, it should only create an inflation of 12%. Something that would become an indirect flat tax without to much overhead. 12% is not hyperinflation.

Inflation doesn't really work that way. Nevertheless, at 12% inflation prices would double every six years.

[Yootwopia]

No, we should return to the gold standard in order to prevent inflation and abusive spending of limited wealth through a limitless process.

No that doesn't work, though, because gold doesn't have a fixed price, and as such the budget is impossible to ever work out a year in advance. At least with a fiat currency you can vaguely work out how things will be in twelve months. This is without mentioning the massive increase in gold prices that would result from a sovereign government of any size trying to back its entire currency, and the obvious question about how this would be funded.

[Qwcasd]

It could only work if the whole world did it. And even then, it would so inconvenient, that it wouldn't be worth it.

[Qwcasd]

The question is does it need to create hyperinflation? If the budget is only a small fraction of the money supply then it should not mathematically create hyperinflation.

Let us say that the total amount of currency at time 0 is : 20 trillion dollars. And the budget is: 2.4 trillion, if this money is not collected but simply created out of thin air, it should only create an inflation of 12%. Something that would become an indirect flat tax without to much overhead. 12% is not hyperinflation.

Inflation doesn't really work that way. Nevertheless, at 12% inflation prices would double every six years.

Meh, we dealt with in the 70s.

[Yootwopia]

Meh, we dealt with in the 70s.

The 1970s weren't so great.

[Cosmopoles]

Meh, we dealt with in the 70s.

You dealt it by cutting the inflation rate back down to manageable levels. Not by sitting around accepting that double digit inflation is here to stay.

[Geilinor]

Printing money to fund expenses? That would result in disaster. Heard of hyperinflation?

The question is does it need to create hyperinflation? If the budget is only a small fraction of the money supply then it should not mathematically create hyperinflation.

Let us say that the total amount of currency at time 0 is : 20 trillion dollars. And the budget is: 2.4 trillion, if this money is not collected but simply created out of thin air, it should only create an inflation of 12%. Something that would become an indirect flat tax without to much overhead. 12% is not hyperinflation.

An inflation rate of 12% is still not something any nation wants to have and it would be unhealthy for most economies.

[The Merchant Republics]

A very bad idea, unless your plan is to stay within a very safe range of printing, with which probably couldn't fund a streamlined version of a night watchman state. So, not that I would generally be against that but, it is hardly feasible.