To Tax or Print
by How should the government pay raise capital?
There are two main ways that a government can generate money: Raise taxes or print it. Many people wonder why the government doesn’t simply print more money instead of raising taxes.. Well the simple answer is they do both. Some people don’t understand that they both basically amount to the same thing.
The government is always printing money to replace old currency that needs to be taken out of service. This is perfectly normal and has no effect on our monetary value. Money printed in addition to what is needed to replace old currency is printed to raise capital. When the government prints this money it devalues the dollar and causes inflation. That means everyone has a cost of living increase because everyone’s dollar is worth less. This is why printing money is called the hidden tax because it has the same effect. I am not saying that printing money is a bad idea and in fact is often very necessary to raise capital.
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