the government can also destroy money about as easily as it creates it, too. it isn't a politically (and usually economically) desirable thing to do. when it's done, it's usually via replacing the whole currency wholesale (e.g. brazilian real).
Not really, if there was no tax there would be no money.
The most succinct way that I have found to express the relationship between taxation and spending is that spending at the federal level is constrained by aggregate spending this year, not tax receipts last year.
It's logically impossible for a government to borrow the currency it issues. What we refer to as borrowing is just swapping one government liability (reserve balances) for another (treasury bonds).
taxes are how you don't have inflation.
the government can also destroy money about as easily as it creates it, too. it isn't a politically (and usually economically) desirable thing to do. when it's done, it's usually via replacing the whole currency wholesale (e.g. brazilian real).
> taxes are how you don't have inflation.
or you know, don't print trillions to bail out failed banks.
Not really, if there was no tax there would be no money.
The most succinct way that I have found to express the relationship between taxation and spending is that spending at the federal level is constrained by aggregate spending this year, not tax receipts last year.
spending is constrained by whatever Congress says it is. the difference is borrowed.
It's logically impossible for a government to borrow the currency it issues. What we refer to as borrowing is just swapping one government liability (reserve balances) for another (treasury bonds).
you don't borrow from the present, you borrow from the future and hope to pay it back with growth