Has any country used inflation as the primary, official way to raise revenue instead of taxes, a la Tezos? (Please don't answer "Weimar Germany". I'm asking for governments where that's the explicit, accepted source of funds rather than a desperate emergency measure)https://twitter.com/FEhrsam/status/949355741160206336 …
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Replying to @devonzuegel
I remember listening to Pauline Hanson - who ran an Australian political party - propose "printing more money" as a primary means of finance. TBC, she wasn't talking about quantitative easing etc, she just thought of it as a budget fix-all. Never implemented, fortunately.
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Replying to @michael_nielsen
If we could tax all wealth at the same rate with no leakage (i.e. exactly X% of every dollar went to the govt) wouldn't this be roughly equivalent?
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Replying to @devonzuegel @michael_nielsen
The problem seems to come when you go too far, bringing it from a steady, predictable rate to uncontrollable hyperinflation, right? Inflation as a funding mechanism isn't inherently problematic (afaict)
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Replying to @devonzuegel
I don't know. IIRC, inflation targetting aims for 1-3% per annum, & seems to work pretty well. I presume that's based in part on models of what people can tolerate, but I've never read the justifications.
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Replying to @michael_nielsen @devonzuegel
I’ve often wondered what this number is a function of.
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Replying to @patrickc @michael_nielsen
Probably a psychological threshold more than anything. A rate with significant impact on value over time but slow enough that it doesn't cause individual people in the economy to act radically differently/erratically day-to-day
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Formally, I think most economists would say the number shouldn’t matter, as long as it is a stable and predictable number. All agents should be able to contract with a numeraire whose value predictably falls by 10% pa as easily as 2% pa. Interest rates would be 8% higher and
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Right; formally. I'm very skeptical of that claim as a practical matter.
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