DaveWhy The Government Has Infinite Money
As the amount of currency approaches infinity, the value of the currency approaches zero
So, what hadn’t clicked until I watch this video, is that federal taxes don’t ‘pay for things’, they are just the mechanism by which federal government ensures the currency has value: They compel us to pay taxes (via courts, police, etc.) and those taxes must be paid in the same currency, and so we have to do work to acquire that currency, and so it has value.
Money existed before the government started using it.
The idea that taxes remove money form the economy and government spending prints new money is an abstraction created for macroeconomics to simplify its models. But it’s a lossy abstraction, so don’t go thinking this is exactly what happens on the real world.
Centralized, minted currencies definitely did not exist before states. Minted currencies were invented multiple times independently across multiple cultures, but one of the biggest through lines between them is that they required a centralized state who held large reserves, and that they were, in every known case, used to support standing armies for those states.
unfreeradicalFiat money maintains its value largely because the government will purchase labor, goods, and other assets without any concern for gain versus loss.
The state therefore generates demand even when and where private entities will not or cannot hire workers, make purchases, or invest.