The Myth of Taxation Explained.

The Myth of Taxation Explained.

[barneybrudenell]

Increased reserves at the private banks (caused by QE) has the effect of lowering interest rates which in turn enables greater private bank lending.

This increases the money supply and thus is inherently inflationary. If the central bank stimulates the interbank market, it always has a knock-on-effect in the real economy and thus is a form of indirect taxation.

[stanleymcomber]

So the declaration of slavery in modern western countries, has been clarified. Thank you.

[davidcann]

Basically, the maths is no more complex than we learned in primary school. Why do they pretend it's too complicated for ordinary people to understand?

[gerhard]

Taxation allows government to create more space for money creation.

It doesn't actually 'pay' for anything and once paid it disappears into the ether never to be seen again.

Ever more 'money' effectively chasing too few goods in a stagnating or shrinking economy is inflationary and taxation remains a fiscal lever to address that imbalance.

[StrixTechnica]

@ProfSteveKeen, QE and fiscal spend are quite different, you know that, and private sector bonds are a form of debt which, like mortgages, net to zero at maturity. yes, it's a balance sheet exercise that increases M3 in the short term *but, * at maturity, M3 is decreased by the same amount.

in contrast, government fiscal spend is money injected into the economy (productive and asset) that isn't returned to the government, other than by taxation.

so in that sense, yes, a government does have to tax to spend, and debt-funded fiscal spend doesn't count because, like bonds and mortgages, that debt has to be paid back (even if only by rolling-over the debt again). ultimately, the only way public debt is ever repaid is through future taxation, amplified by inflation decreasing the real value of historic debt.

[zeropaloobatheuber]

Taxes can only be paid in fiat currency. Taxation is absolutely essential as it creates demand for the currency.

[Emanresu]

The purpose of taxation is to reduce purchasing power

[Wowsers]

Why do we need to pay taxes then? The biggest tax is inflation!!