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This post was originally made in the now closed DiscussEconomics forum.

I signed up because we are having this specific argument at work, and I’m wondering if anyone here can provide some educated insight.

So, the argument is this… instead of taxing our income, why doesn’t the government just print more money to pay for what it needs? We keep our whole income, and the hypothesis is that it equals out in the end. The value of the dollar would go down over time, but the income would go up.

Now, intuitively that just seems wrong to me. It feels like this would have a non-linear effect of massively devaluing the currency such that it would soon be worth nearly nothing. I don’t know how to prove this one way or the other though, hence my posting here.

Anyone have an informed opinion on this?