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Author Topic: Why governments like inflationary currency  (Read 1838 times)
ptd
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April 22, 2011, 01:57:50 PM
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Governments tax all forms of income. One form they tax is income made on investments or through bank interest. However the measure of constant value they use is their very own inflating currencies. Since they are decreasing in value you must claim interest (and pay tax) on it in order to keep a constant value stored. Thus, the faster money inflates the more tax governments make.

Combine this observation with the fact that what will probably happen when governments finally run out of money is hyperinflation (me thinks they will probably shy away from default at first). As the currency inflates not only will their debts decrease in value, the tax they make will also increase.
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asdf
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April 23, 2011, 04:56:13 AM
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... and they get to spend the new money too! ;-)
bitjet
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April 29, 2011, 01:11:54 AM
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... and they get to spend the new money too! ;-)

And when they spend the newly created money they get the full value of it. As it trickles through the economy the rest of the users do not.
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April 29, 2011, 02:55:59 AM
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Why is that better than having the money you already have become more and more valuable over time without you having to do anything?

(I dont always get new reply notifications, pls send a pm when you think it has happened)

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FooDSt4mP
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April 29, 2011, 02:58:42 AM
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Why is that better than having the money you already have become more and more valuable over time without you having to do anything?
http://bitcointalk.org/index.php?action=post;quote=98907;topic=6282.0;num_replies=3;sesc=f110e8549b9ed04edf7b85ba5234fe44

Because they've already spent more than they have.  Inflation lowers the stored value of their debt,

As we slide down the banister of life, this is just another splinter in our ass.
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April 29, 2011, 04:02:27 AM
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Ah, right

(I dont always get new reply notifications, pls send a pm when you think it has happened)

Wanna gimme some BTC for any or no reason? 1FmvtS66LFh6ycrXDwKRQTexGJw4UWiqDX Smiley

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river
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May 03, 2011, 09:43:23 AM
 #7

Governments do not like inflationary currencies (they loose power from them and they know it) .. they're just to stupid to know what real money is anymore .. they .. like most people are brainwashed idiots that don't want to think.
tomcollins
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May 03, 2011, 02:49:48 PM
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Governments do not like inflationary currencies (they loose power from them and they know it) .. they're just to stupid to know what real money is anymore .. they .. like most people are brainwashed idiots that don't want to think.

How do they lose power from them?  It's the greatest thing ever to be able to spend counterfeited money first.
river
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May 03, 2011, 03:04:20 PM
 #9

Governments do not like inflationary currencies (they loose power from them and they know it) .. they're just to stupid to know what real money is anymore .. they .. like most people are brainwashed idiots that don't want to think.

How do they lose power from them?  It's the greatest thing ever to be able to spend counterfeited money first.

Simple .. people hate inflation .. they hate their labour and skills having no value .. they hate having to earn more for less and they (rightfully) blame it on the governments .. and no longer obey it ... so the governments loose power ............... when the people are happy with a government (see Alexander the Great outlawing Fiat for Gold/Silver/Bronse) they obey the governments commands with less resistance .. the government gets more power, and a stronger nation.
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May 03, 2011, 03:10:18 PM
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Governments do not like inflationary currencies (they loose power from them and they know it) .. they're just to stupid to know what real money is anymore .. they .. like most people are brainwashed idiots that don't want to think.

How do they lose power from them?  It's the greatest thing ever to be able to spend counterfeited money first.

Simple .. people hate inflation .. they hate their labour and skills having no value .. they hate having to earn more for less and they (rightfully) blame it on the governments .. and no longer obey it ... so the governments loose power ............... when the people are happy with a government (see Alexander the Great outlawing Fiat for Gold/Silver/Bronse) they obey the governments commands with less resistance .. the government gets more power, and a stronger nation.

People hate taxes more.  And most people are oblivious to small levels of inflation, or accept it as natural.  Sure, if you go overboard, you can destroy the government.  You have to steal just enough that no one cares what you are stealing.  Take a few pennies from a lot of people and you become rich.
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May 09, 2011, 06:16:13 AM
 #11

Governments do not like inflationary currencies (they loose power from them and they know it) .. they're just to stupid to know what real money is anymore .. they .. like most people are brainwashed idiots that don't want to think.

How do they lose power from them?  It's the greatest thing ever to be able to spend counterfeited money first.

Simple .. people hate inflation .. they hate their labour and skills having no value .. they hate having to earn more for less and they (rightfully) blame it on the governments .. and no longer obey it ... so the governments loose power ............... when the people are happy with a government (see Alexander the Great outlawing Fiat for Gold/Silver/Bronse) they obey the governments commands with less resistance .. the government gets more power, and a stronger nation.

People hate taxes more.  And most people are oblivious to small levels of inflation, or accept it as natural.  Sure, if you go overboard, you can destroy the government.  You have to steal just enough that no one cares what you are stealing.  Take a few pennies from a lot of people and you become rich.

Printing more money to pay off failing banks that never pay back is stealing from people? And you say because this devalues everyone's dollar they already have to do it? I never thought people would figure this out. Not that it matters because public education is so deteriorated to a point that it is impossible gathering enough educated people to care or initiate change in the US.
Ryan
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May 09, 2011, 05:40:55 PM
 #12

Inflation may increase nominal tax dollars, but not real dollars. So that's really a wash.

Some counties earn money via seigniorage (printing money, selling it at face value and taking the difference as profit). The U.S. doesn't, except in the case of coinage, which is a small exception.

However, governments often do "like" inflation:
a) Around re-election time, increased government spending can drive a short-lived economic boost. It's terrible long-term, however, and this was a major argument for separating the Fed (who controls interest rates) from the USG.
b) it deflates deficits when the debt is held in dollars.
MemoryDealers
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May 10, 2011, 01:52:44 AM
 #13

Inflation may increase nominal tax dollars, but not real dollars. So that's really a wash.

You are forgetting about "Bracket Creep"

Bracket Creep is when inflation pushes peoples incomes into higher tax brackets.
The result is an increase in income tax rates, but no increase, or even a decrease in real purchasing power.

(Thanks to Miton Friedman for explaining this to me)

Ryan
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May 10, 2011, 02:12:29 PM
 #14

Inflation may increase nominal tax dollars, but not real dollars. So that's really a wash.

You are forgetting about "Bracket Creep"

Bracket Creep is when inflation pushes peoples incomes into higher tax brackets.
The result is an increase in income tax rates, but no increase, or even a decrease in real purchasing power.

(Thanks to Miton Friedman for explaining this to me)

Good point in theory. In the US, tax brackets are adjusted for inflation. I don't know about other countries.
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