Wednesday, April 27, 2011

In a fiat money system... are taxes needed?

I want to hear from "experts" who really understand how fiat monetary systems work.

I get the idea that money is not backed by anything other than 'trust'. 

I get that money is 'loaned into existence' out of thin air.

I get that a debt-based monetary system is a great tool to keep people working and producing, aka keeping people enslaved without their awareness (how clever!). Without debt, economic growth would slow down.

I get that this injection of phony money into an economic system drives inflation, and that this is why deficit spending accelerates inflation; because governments have to borrow into existence phony money that never ever existed.

And I get that when a government pays its debts back to a central bank, that the money just 'disappears' back into oblivion.

What I don't get is why do governments still need to raise taxes if the central banks can just wave a magic wand to wish more money into existence?

If the value of money is literally based on nothing, then why does it matter?

I'm really trying to understand how this mess works. 

Does anyone actually understand this hocus-pocus anyway? I like to think that if I figured out the mechanism by which ion channels operate, that I could understand this fiat money stuff... but I still can't wrap my mind around it, which makes me think that it's either way simpler than I imagine, or it's a big scam by central bankers to print themselves a bunch of counterfeit bank notes while we perform slave labor paying interest charges and taxes to a bunch of pigs. 

Someone please explain. If they (ah! the elusive 'they') can print phony fiat money, why are we still being taxed?


  1. Making new money is like taxing existing money, since it makes it more common. If you want to tax home ownership or something other than possessing dollars, you tax that instead of printing money.

    But money is backed by more than faith. If you want to import a truck of goods into the US, you have to pay the government in dollars. No amount of bananas or gold will do.

  2. Pay the government or pay the shipper?

    I guess I'm still confused by the arbitrary nature of fiat currency valuation.

  3. Government could simply print what they needed, but then too many people would actually understand the implications of fractional reserve banking and the advantages it bestows on the private bankers and how that advantage extends right throughout the economy. For the same reason government employees have to recycle their share of taxes and perversely call it taxes. People would then be able to accurately estimate the cost of government on society. So if you're confused, they have achieved their goal.