I'm reading a book, Money from Nothing, and I'm curious if anyone can point out if this is a flaw in my understanding:
Taxes are not really a means of a federal government raising funds to pay for things, since they can after all print whatever they need, but instead a way to take money out of circulation to help control inflation.
So a thing like war bonds is never for actually financing a war effort, but help control inflation for all the printing that probably is going on.
So tax compliance and tax code is a monetary tool to control inflation/deflation, not a financing/fiscal tool to pay for stuff. To be clear, local/state government can't print their own money obviously, so taxes actually are raised to pay for things.
Taxes are not really a means of a federal government raising funds to pay for things, since they can after all print whatever they need, but instead a way to take money out of circulation to help control inflation.
So a thing like war bonds is never for actually financing a war effort, but help control inflation for all the printing that probably is going on.
So tax compliance and tax code is a monetary tool to control inflation/deflation, not a financing/fiscal tool to pay for stuff. To be clear, local/state government can't print their own money obviously, so taxes actually are raised to pay for things.