Why Doesn't the Government Just Print Its Tax Money?
From reader Casey McGrath:
So here is something I have never understood. The government prints our money and then gets it circulating in to the system by loaning it to banks at the prime rate — usually 2 or more points lower than retail lending rates. The banks then loan it to corporations and the public at higher rates, the money is then used to pay employees whereupon the government takes back approximately 23% of that same money to pay for the operation of our government. Why doesn’t the government just keep 23% (or the net equivalent of what they currently make off the public) of the money it prints and eliminate all taxes?
I mean isn’t the taxation system just a means of calculating how much the government can spend so we don’t spend more than we are producing and therefore cause inflation?