if you saturate the market with your currency it becomes less valuable and we end up with runaway inflation.
Notice how I didn’t say that the state should create infinite currency, I’m just saying that the limit isn’t based on taxation. And funnily enough, if you look at basically all inflationary episodes in developed countries over the past century, they’ve happened as a consequence of problems with the supply of goods, not as a consequence of excess currency creation. 2022 inflation? Energy prices and supply chain bottlenecks as a consequence of Ukraine invasion and post-covid effects on production. 1970s inflation? Fuel prices… Really, I encourage you to look up a graph of inflation for, say, the USA, over the past century, to look at the inflation peaks, and to make a Google search “crisis of 19XX”. You’ll find that the inflation was in basically all instances prefaced by a big external event, and not by money creation. Moreover, many of these inflation events happen simultaneously in countries such as the US, UK, Japan and Germany, all of which have different central banks, different currencies, and different rates of currency creation.
Also, there’s countless examples of vast increases in money supply without inflation. In the decade of 2010-2020, the EU has created VAST amounts of euros with basically no meaningful inflation. You can look up the Euro monetary mass M2 or M3 over the past decade, you’ll find a huge boom, without any effect on inflation. Again, all of this isn’t to say there isn’t a practical limit to how much you should create before destabilizing the economy, just that the limit is absolutely not imposed by how much you’re collecting in taxes, and it depends a lot, for example, on which part of the capitalist boom-bust cycle you are. Another argument for this, is that money creation doesn’t have to be just that, it can imply an increase in the amount of available goods and services. As a stupid example, the US government could open a state-funded iron mine and a refinery, hiring all the employees with newly minted currency, and that would effectively increase the total amount of goods and services in circulation, which can balance out the supposed inflationary effect of the currency creation.
About taxes not being currently used practically to reduce inequality, I agree, but that’s not a point against the nature of taxation, that’s a point against the current decision of who we’re taxing, what for, and how much. I absolutely agree with ramping up the taxes of huge multinational companies and their directives. It’s just, if we see taxes not as a necessity to fund the state’s activity, but as a necessary tool to reallocate money in the economy from rich people to poor people and to create a welfare state and a great infrastructure, it’s much easier to explain why Amazon should pay 90% taxes and your average low-paid worker only 10%.
As for your last point with inequality between companies’ income and that of people, I couldn’t agree more, I’m a hardcore leftist and I want to reduce wealth inequality extremely, again, I’m not arguing for lowering taxes “since they’re not necessary”, I’m arguing for reallocating the taxes in a much more progressive way to disincentivize certain behaviors such as speculation, and to reduce inequality between the richest and the poorest.
Thanks for the civilized discussion, it’s good to be able to actually discuss this stuff.
You missed the biggest flaw in the “money creation = inflation” argument. That would be Japan. They’ve been printing money full tilt for the last couple decades, and are just barely staving off deflation
No. Thank you for giving me some food for thought and areas to research to further my understanding, rather than talking down to me due to my lack of knowledge on the macro economics of the world.
To be fair, it’s not you lacking knowledge, it’s a fundamental problem in the field of economics, which because of political reasons, has been dominated for the past decades by neoliberalism. The problem is that neoliberalism reaches conclusions that have been falsified by experimental data in several occasions, but since it serves the ideology of the elites, it’s peddled constantly in media by prominent “economist” propagandists. If you’re interested into the topic and this modern, more empirical vision of the economy, the field is called “Modern Monetary Theory” or MMT. There’s a documentary released recently about the basics of it, applied to the US, called “Finding The Money”, and I can also recommend the YouTube channel called “Unlearning Economics”, which isn’t MMT per se but it’s very keen on treating economics through empyrism.
Notice how I didn’t say that the state should create infinite currency, I’m just saying that the limit isn’t based on taxation. And funnily enough, if you look at basically all inflationary episodes in developed countries over the past century, they’ve happened as a consequence of problems with the supply of goods, not as a consequence of excess currency creation. 2022 inflation? Energy prices and supply chain bottlenecks as a consequence of Ukraine invasion and post-covid effects on production. 1970s inflation? Fuel prices… Really, I encourage you to look up a graph of inflation for, say, the USA, over the past century, to look at the inflation peaks, and to make a Google search “crisis of 19XX”. You’ll find that the inflation was in basically all instances prefaced by a big external event, and not by money creation. Moreover, many of these inflation events happen simultaneously in countries such as the US, UK, Japan and Germany, all of which have different central banks, different currencies, and different rates of currency creation.
Also, there’s countless examples of vast increases in money supply without inflation. In the decade of 2010-2020, the EU has created VAST amounts of euros with basically no meaningful inflation. You can look up the Euro monetary mass M2 or M3 over the past decade, you’ll find a huge boom, without any effect on inflation. Again, all of this isn’t to say there isn’t a practical limit to how much you should create before destabilizing the economy, just that the limit is absolutely not imposed by how much you’re collecting in taxes, and it depends a lot, for example, on which part of the capitalist boom-bust cycle you are. Another argument for this, is that money creation doesn’t have to be just that, it can imply an increase in the amount of available goods and services. As a stupid example, the US government could open a state-funded iron mine and a refinery, hiring all the employees with newly minted currency, and that would effectively increase the total amount of goods and services in circulation, which can balance out the supposed inflationary effect of the currency creation.
About taxes not being currently used practically to reduce inequality, I agree, but that’s not a point against the nature of taxation, that’s a point against the current decision of who we’re taxing, what for, and how much. I absolutely agree with ramping up the taxes of huge multinational companies and their directives. It’s just, if we see taxes not as a necessity to fund the state’s activity, but as a necessary tool to reallocate money in the economy from rich people to poor people and to create a welfare state and a great infrastructure, it’s much easier to explain why Amazon should pay 90% taxes and your average low-paid worker only 10%.
As for your last point with inequality between companies’ income and that of people, I couldn’t agree more, I’m a hardcore leftist and I want to reduce wealth inequality extremely, again, I’m not arguing for lowering taxes “since they’re not necessary”, I’m arguing for reallocating the taxes in a much more progressive way to disincentivize certain behaviors such as speculation, and to reduce inequality between the richest and the poorest.
Thanks for the civilized discussion, it’s good to be able to actually discuss this stuff.
You missed the biggest flaw in the “money creation = inflation” argument. That would be Japan. They’ve been printing money full tilt for the last couple decades, and are just barely staving off deflation
Interesting, I’ll look up the monetary mass of Japan over time, thanks!
No. Thank you for giving me some food for thought and areas to research to further my understanding, rather than talking down to me due to my lack of knowledge on the macro economics of the world.
I really do appreciate you taking the time.
To be fair, it’s not you lacking knowledge, it’s a fundamental problem in the field of economics, which because of political reasons, has been dominated for the past decades by neoliberalism. The problem is that neoliberalism reaches conclusions that have been falsified by experimental data in several occasions, but since it serves the ideology of the elites, it’s peddled constantly in media by prominent “economist” propagandists. If you’re interested into the topic and this modern, more empirical vision of the economy, the field is called “Modern Monetary Theory” or MMT. There’s a documentary released recently about the basics of it, applied to the US, called “Finding The Money”, and I can also recommend the YouTube channel called “Unlearning Economics”, which isn’t MMT per se but it’s very keen on treating economics through empyrism.