Saturday, February 25, 2012

Why Governments Charge Rent

According to Matthew Yglesias of Slate:
The government has men with guns and dungeons. The armed men will throw you in the dungeon unless you pay taxes. So if the government chooses to accept random pieces of paper as payment, the pieces of paper become valuable. The point of collecting taxes isn't that the government needs money (it can print money); it's that if the quantity of taxes is too low relative to the stock of money, then the money loses its value and the price level rises.
Poster for "Rent" by Jonathan Larson

No wonder the government is constantly increasing the taxes (rent) it charges its citizens...

Source: Yglesias, M (2012, February 25), Modern Monetary Theory In The 17th Century, Slate.

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