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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: bart13 who wrote (86541)	1/28/2012 2:11:11 PM
From: Maurice Winn	1 Recommendation Read Replies (1) \| Respond to of 217931

< inflation hits government receipts too. > The reason they dilute everyone else is so that they can spend the extra money produced. The money printer wins. Government receipts go up, not down. Suppose there are 100 x $1 coins in circulation. If the government takes a third of them a year as tax, the government gets 33 a year. If the government also produces another 50 a year, the government ends year 1 with 83 coins to spend the following year, while the rest of the people have only 66 [one coin got lost down a drain], there now being 150 coins in circulation [a slight miscount but near enough for government work]. The following year, being accustomed to a high income, they do it again. But this time they produce 75 coins. With the 50 taxed and 75 that's 125 the government gets to spend the following year with 225 coins in circulation. Due to the inflationary dilution, prices will have risen as there are 225 coins in circulation but only the same amount of goods and services. The false premise of the government is that this "stimulation" makes people work harder to produce more goods and services. "We'll mint more coins, give them to our friends, so you will work harder to increase our luxurious lifestyle". On the contrary, when people are robbed, they give up working as there's little point. The more they are robbed, the more they give up. In societies where the tribe takes anything produced, and gives it to the bosses, the people live horrible subsistence lives with there being no reason to try to achieve much of anything. The bosses try to avoid this by not being too greedy. But mostly they can't help themselves and need more and more hangers-on in the royal retinue to keep the baying mob at bay. One day there is an Occupy The Palace riot and the bosses have their heads handed to them. So yes, eventually government receipts go down, but in the meantime, it's party time in shovel-ready stimulus central. Mqurice