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Home | Blog | Oh, wow, it turns out that we can print our way to heavenly bliss!

Oh, wow, it turns out that we can print our way to heavenly bliss!

April 28, 2010

Government is constrained only by the inflation it can create by over-spending, but its ability to spend is numerically unlimited. — Pavlina R. Tcherneva, Assistant Professor, Franklin and Marshall College

The dollars are nothing more than data entry on the Fed’s computer. They have no other existence. And it has no impact on the government’s ability to spend as to whether China’s dollars are in their checking account or savings account. — Marshall Auerback, Senior Fellow at the Roosevelt Institute and Warren Mosler, President, Valance Co.

So if the government doesn’t need to tax to be able to spend, why does it tax at all? There are two reasons. First, the government creates demand for its currency through taxation. If the public didn’t need the dollars to pay its taxes, it wouldn’t be willing to sell goods and services to the government in return for pieces of paper (or numbers in a checking account). Taxes, then, are what give value to money. Second, the government uses taxes to control the public’s spending power. When the public has too much spending power, government taxes some of it away to avoid inflation. — Yeva Nersisyan, Doctoral candidate in economics, University of Missouri-Kansas City, Missouri

In the US, hyperinflation will not be an issue if the government spends while it has a large deficit because with high unemployment and unused yet functioning factories all across the country, there is plenty of room to cut taxes and/or increase spending to get us to full employment. — Marshall Auerback, Senior Fellow at the Roosevelt Institute and Rob Parenteau, sole proprietor of MacroStrategy Edge

There much more where that came from, much much more.

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