this post was submitted on 30 Sep 2023
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I lashed out in frustration with an insult, which wasn't appropriate. I'm sorry. I was frustrated with how my use of "infinite money" was taken literally, when you as an economist would know that nothing regarding the economy could be infinite. I'm still a bit irritated that your entire disagreement is based on pendantry.
"infinite money" was obviously hyperbole, for the record. They tried to make it seem like it wasn't obvious, but if they really couldn't tell then they were being oblivious.
How do you mean it then? Because it's not clear at all.
The government obviously print money in a form that is sort of as a tax on everyone. Inflation is independently set from the government at something like 2% so the government makes money when the bank print enough to ensure that inflation remains at 2%. But that's independent if the government so the government absolutely does not have infinite money. They have 2%.
It used to be more but that was seen to be detrimental to the economy and the government, so 1-2% is where most countries set it.
The government absolutely has to manage how it spends money and it can only spend what the economy can absorb which isn't much.
So maybe it is up to you to explain. Because you seemed to make out that the government can just choose to spend a lot more money with 0 negative consequences. Also for some reason even though the government is able to do this, they don't.
Both points need explaining.
This entire thing relies on the federal government having the ability to print money that is not backed by a commodity, and does not owe a significant amount of debt to another country. Taxes on the federal level literally don't fund anything (note that this is not true of local or state taxes). They exist solely to drive demand for the currency. Instead, the upper limit to government spending is the amount of resources and labor available to the government, which is several trillions of dollars worth more than the federal budget. This is what's known as the real economy. A single trillion is incomprehensible, hence why I called it "infinite money".
The value of money is determined by market forces and international trade and exchange.
The only efficient way to get anything out of the economy for the government to use is though taxes.
Taxes do fund things. The government has to manage its money it can't just spend needlessly.
Let's say taxes do nothing for government spending? Why do it? To drive demand for the currency? What does that even mean. Why is that a good things for the government to create fake demand for the currency? There is already real demand there because people need it to by something.
So why doesn't the government get several trillions more worth of dollars resources and labour then? It can do so much more. (How would this not have a catastrophic effect on the economy).
It's absolutely not infinite money. If you struggle to think of money in that high of numbers think about it as a percentage of the economy. The government can only use a percentage of that economy it can't take and take and take without reducing the rest of the economy. Different countries have different percentages and that has pros and cons.
But it's not unlimited. It's a percentage of the economy. Could the us tax it's people as much as Sweden or Denmark? Yes . But that's not unlimited that's just different ways of governance. You're original point is losing all meaning. The government cannot spend needlessly without negative impacts which is what you were implying.
My country has higher taxes than the US and I like that, but it's a choice. Our wages are lower because of it but we get free healthcare. Doesn't mean our government has unlimited money because I get taxes more, it just means I have less.
Do you know what a fiat currency even is? It seems like your mind is still stuck in the gold standard. I'm not going to get into your pendantic bullshit again.
Yes it's driven by market forces.
You know the feds job is to control the flow of money right? Independent of the government.
They will put the country into a recession before inflation gets out of hand. That's how important the control of currency is, it's the main job.
It seems like you don't understand how fiat currency has its value or who controls it.