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Author Topic: Why do we need to Tax?  (Read 4035 times)
Hawker
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September 26, 2011, 09:36:39 PM
 #21

So the central bank will never be able to purchase government debt in exchange for currency???

How is ever possible for a country that issues its own currency to not have enough of that currency??

That is like saying to bitcoin miners; 'the only way you can mint more bitcoins is if you first purchase them from the market' under such a regime it would be impossible to increase the number of bitcoins.

This is so far off reality it's cruel.  



Why don't you post something with substance? Instead of relying upon immature replies to cover your lack of understanding.

Why don't you take 15 minutes to read about Weimar or Zimbabwe or Greece or any other country where the State has run out of credit?

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AyeYo
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September 26, 2011, 09:47:47 PM
 #22

Obviously troll thread is now fulfilled.  It was pretty clear he wasn't asking to get a real answer, but I gave him the benefit of a doubt.

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Iseree22
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September 26, 2011, 09:48:57 PM
 #23

Zimbabwe and the Wiemar had to much credit........

Greece on the other hand does not print the Euro. So if you had bothered to thoroughly read the posts of this thread you would realize that what I'm talking about does not apply to Greece.

Next time, please, take a few moments to think.

 Learn how modern money really works.  (http://alturl.com/e4hu5) Ctrl-F : 1. What is Money?

How can a State(Country) that creates its own currency run out of Money?? It can't.
Hawker
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September 26, 2011, 09:56:45 PM
 #24

Zimbabwe and the Wiemar had to much credit........

Greece on the other hand does not print the Euro. So if you had bothered to thoroughly read the posts of this thread you would realize that what I'm talking about does not apply to Greece.

Next time, please, take a few moments to think.


Please take time to read about them.  They didn't have credit - thats why they had to print money.

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September 26, 2011, 11:30:01 PM
 #25

Most Countries issue their own currency. If a country is able to issue its own currency why should it bother taxing the people to pay for services?? A country that issues its own currency could issue enough currency to pay for the necessary social services of that country. No Tax burden is needed to pay for the necessary public services.

Taxes generate income from the act of trade. An inflated money supply can only be spent once, and will destroy the currency very very quickly. Taxes are forever, and don't need to cause inflation.
fivebells
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September 27, 2011, 12:02:31 AM
 #26

Most Countries issue their own currency. If a country is able to issue its own currency why should it bother taxing the people to pay for services?? A country that issues its own currency could issue enough currency to pay for the necessary social services of that country. No Tax burden is needed to pay for the necessary public services.
This is explained very clearly in Debt: The First 5,000 Years, which I highly recommend to anyone who wants to really understand economic life (as opposed to just swallowing the prevailing theoclassical theory).

The imposition of taxes, which must be paid in government currency, is precisely what gives government currency its worth.  Even if you conduct your business entirely in bitcoin, if you live in the US or are a US citizen, IRS will still want its share of your income paid in USD.  This creates great demand for an object which the government is ultimately the sole provider of, which gives it a great deal of power.
Iseree22
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September 27, 2011, 07:09:37 AM
 #27

Most Countries issue their own currency. If a country is able to issue its own currency why should it bother taxing the people to pay for services?? A country that issues its own currency could issue enough currency to pay for the necessary social services of that country. No Tax burden is needed to pay for the necessary public services.
This is explained very clearly in Debt: The First 5,000 Years, which I highly recommend to anyone who wants to really understand economic life (as opposed to just swallowing the prevailing theoclassical theory).

The imposition of taxes, which must be paid in government currency, is precisely what gives government currency its worth.  Even if you conduct your business entirely in bitcoin, if you live in the US or are a US citizen, IRS will still want its share of your income paid in USD.  This creates great demand for an object which the government is ultimately the sole provider of, which gives it a great deal of power.

Yea your right. Chartalism is the economic thought that asserts that the Government( or currency issuer) must spend before it can collect taxes. How can a state collect taxes if the currency has not been issued yet??

Zimbabwe and the Wiemar had to much credit........

Greece on the other hand does not print the Euro. So if you had bothered to thoroughly read the posts of this thread you would realize that what I'm talking about does not apply to Greece.

Next time, please, take a few moments to think.


Please take time to read about them.  They didn't have credit - thats why they had to print money.

Why does a country need to obtain credit, if it creates its own currency???

The only issue is a possible inflation. Which is very unlikely to happen in any economy that has high unemployment. Not all money printing is inflationary. Using new money to employ people is potentially deflationary. When someone is employed then total production of goods and services increases, which is deflationary. So if the amount of goods & services created is greater than the wage it took to employ someone, then such a situation is deflationary.

 Learn how modern money really works.  (http://alturl.com/e4hu5) Ctrl-F : 1. What is Money?

How can a State(Country) that creates its own currency run out of Money?? It can't.
Sultan
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September 27, 2011, 11:43:13 AM
 #28

Printing money increases they money supply and so it, usually, devalues the currency. Paying taxes decreases the money supply, ideally.

To be honest, there should only be taxes and no money-printing. Or only print money to ensure each unit maintains its value. But that is a difficult balance and usually ends up with a devaluing currency.

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idontknow
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September 27, 2011, 12:36:27 PM
 #29

To be honest, there should only be taxes and no money-printing.

Printing money is a tax.

Only with money printing they take the wealth proportionally from all bank accounts, so it's more like a savings tax rather than an income tax.

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AyeYo
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September 27, 2011, 01:04:57 PM
 #30

The imposition of taxes, which must be paid in government currency, is precisely what gives government currency its worth. 

Then why does it have worth OUTSIDE of the country as well?

Enjoying the dose of reality or getting a laugh out of my posts? Feel free to toss me a penny or two, everyone else seems to be doing it! 1Kn8NqvbCC83zpvBsKMtu4sjso5PjrQEu1
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September 27, 2011, 01:10:03 PM
 #31

The imposition of taxes, which must be paid in government currency, is precisely what gives government currency its worth. 

Then why does it have worth OUTSIDE of the country as well?

Well, if Japanese valued their Yen, it makes sense that anyone else around the world would also value the Yen, because they can buy things from the Japanese with it.

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Iseree22
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September 27, 2011, 01:18:09 PM
 #32

The imposition of taxes, which must be paid in government currency, is precisely what gives government currency its worth. 

Then why does it have worth OUTSIDE of the country as well?

From a Chartalists p.o.v the State creates money, spends it via appropriations and then taxes the community creating a demand for the currency.

 Learn how modern money really works.  (http://alturl.com/e4hu5) Ctrl-F : 1. What is Money?

How can a State(Country) that creates its own currency run out of Money?? It can't.
AyeYo
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September 27, 2011, 01:21:29 PM
 #33

The imposition of taxes, which must be paid in government currency, is precisely what gives government currency its worth. 

Then why does it have worth OUTSIDE of the country as well?

From a Chartalists p.o.v the State creates money, spends it via appropriations and then taxes the community creating a demand for the currency.

While that is workable, it implies that the sole or primary purpose of taxation is to create value for the currency, which is absurd.

Enjoying the dose of reality or getting a laugh out of my posts? Feel free to toss me a penny or two, everyone else seems to be doing it! 1Kn8NqvbCC83zpvBsKMtu4sjso5PjrQEu1
Iseree22
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September 27, 2011, 01:26:32 PM
 #34

It sounds absurd, but the idea that a country that creates its own currency can run out of money is more absurd.

Taxes appear to serve two purposes, creating a demand and regulating inflationary pressures. When inflation increases taxes should also increase.

 Learn how modern money really works.  (http://alturl.com/e4hu5) Ctrl-F : 1. What is Money?

How can a State(Country) that creates its own currency run out of Money?? It can't.
Hawker
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September 27, 2011, 01:37:47 PM
 #35

It sounds absurd, but the idea that a country that creates its own currency can run out of money is more absurd.

Taxes appear to serve two purposes, creating a demand and regulating inflationary pressures. When inflation increases taxes should also increase.

Lets consider a simple example.  A government want to buy an aircraft for $100 million.

Can they work their printing press to make $100 million in their own currency?  Only if the seller accepts it.  Sellers won't - they want the be paid in a "hard" currency like the dollar, sterling or the euro.

The only way the government can print enough money to buy the aircraft is to print enough that the pulp value is $100 million and barter it for the aircraft. 

AyeYo
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September 27, 2011, 01:42:10 PM
 #36

It sounds absurd, but the idea that a country that creates its own currency can run out of money is more absurd.

It's not absurd at all.  You've overlooking the fact that currency has no fixed value and no intrinsic value.

They can print all the currency they want, but that doesn't mean it'll have any value.


"We can guarantee cash, but we cannot guarantee purchasing power." - Alan Greenspan

Enjoying the dose of reality or getting a laugh out of my posts? Feel free to toss me a penny or two, everyone else seems to be doing it! 1Kn8NqvbCC83zpvBsKMtu4sjso5PjrQEu1
Iseree22
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September 27, 2011, 01:56:49 PM
 #37

It sounds absurd, but the idea that a country that creates its own currency can run out of money is more absurd.

Taxes appear to serve two purposes, creating a demand and regulating inflationary pressures. When inflation increases taxes should also increase.

Lets consider a simple example.  A government want to buy an aircraft for $100 million.

Can they work their printing press to make $100 million in their own currency?  Only if the seller accepts it.  Sellers won't - they want the be paid in a "hard" currency like the dollar, sterling or the euro.

The only way the government can print enough money to buy the aircraft is to print enough that the pulp value is $100 million and barter it for the aircraft. 

Hate to burst your bubble but this is how the Dollar, Sterling and Euro work.

I'll use the U.S as an example. Geithner is told to fund the purchase of a $100 million aircraft. The Treasury currently has $0 dollars, what does Geithner do?? He creates Treasuries and sells them to the market in exchange for Dollars to pay for the aircraft. If no one wants to buy the Treasuries and inflation is within the FEDs target window, then the FED will print money and purchase the Treasury. There is nothing hard about the U.S dollar. It is backed by nothing more than faith.

It sounds absurd, but the idea that a country that creates its own currency can run out of money is more absurd.

It's not absurd at all.  You've overlooking the fact that currency has no fixed value and no intrinsic value.

They can print all the currency they want, but that doesn't mean it'll have any value.


"We can guarantee cash, but we cannot guarantee purchasing power." - Alan Greenspan

Your right, if there is an inflation then they can't print more money without doing damage to the economy. But printing money to lower unemployment is not inflationary. Whenever fresh money is used to utilize unused capacity, then inflation will not occur.

 Learn how modern money really works.  (http://alturl.com/e4hu5) Ctrl-F : 1. What is Money?

How can a State(Country) that creates its own currency run out of Money?? It can't.
AyeYo
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September 27, 2011, 02:07:45 PM
 #38

Your right, if there is an inflation then they can't print more money without doing damage to the economy. But printing money to lower unemployment is not inflationary. Whenever fresh money is used to utilize unused capacity, then inflation will not occur.

And using fresh money to fulfill obligations like SS, Medicare, and the federal payroll is NOT using it to utilize unused capacity... so your statement is still absurd.


You can't just create money to pay the government's bills.  You CAN print money to fund infrastructure projects, do research, and other things that will actually create jobs and grow the economy.  This is what's being attempted now.  But that's not remotely comparable to just saying, "hai guise, no more taxes! We're just going to print what we need to pay the bills!"

Enjoying the dose of reality or getting a laugh out of my posts? Feel free to toss me a penny or two, everyone else seems to be doing it! 1Kn8NqvbCC83zpvBsKMtu4sjso5PjrQEu1
Iseree22
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September 27, 2011, 02:22:50 PM
 #39


Perhaps your right, then the next question is; why are people trying to reduce the national debt ?

 Learn how modern money really works.  (http://alturl.com/e4hu5) Ctrl-F : 1. What is Money?

How can a State(Country) that creates its own currency run out of Money?? It can't.
AyeYo
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September 27, 2011, 02:35:23 PM
 #40


Perhaps your right, then the next question is; why are people trying to reduce the national debt ?

Because like any debt, we're getting to the point that servicing the interest alone is becoming a significant part of our budget.  We're up to almost 5% of the budget at this point.  That's over $150 billion per year in interest charges.


Most importantly, go back to what you said about how government spending works.  We sell treasuries on the open market and people buy them because they believe they'll be paid back.  We're rapidly approaching the point where people are doubting whether they'll actually get paid back.  Of course we can just print money to pay them back with any time we want, but go back to the quote from Greenspan - giving them cash isn't the same thing as giving them value.  So if no one else wants to buy our debt, we're left with the Fed.  That's why the Fed is independent of the government.  They won't keep buying treasuries forever either.

So do we really NEED to reduce the national debt?  No.  But we absolutely have to stop adding to it, especially at the ridiculous rate we're going now.  The debt can grow, but it needs to do so at a sustainable rate so that we're not: #1, overrunning ourselves with interest payments, and #2, grossly outpacing real GDP growth.  It's not all that much unlike your previous question.  We can increase money supply, but only if it's adding real value to the economy.  We can increase debt, but only if it's adding real value to the economy.

Enjoying the dose of reality or getting a laugh out of my posts? Feel free to toss me a penny or two, everyone else seems to be doing it! 1Kn8NqvbCC83zpvBsKMtu4sjso5PjrQEu1
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