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Comment by kitanata | Hacker News Reader

Anytime the government spends money on anything it prints money to do so. This is how governments work.

You aren’t against the government printing money. You are against why they are printing money.

It makes sense to print money and spend that money into the economy to accomplish a task if the result of that has a positive ROI.

Can we debate the ROI of the activity, rather than “inflation bad”, “printing money bad” or “politician bad”?

Using monetary policy as your point of disagreement is intellectually dishonest when your actual problem is with what the government is spending money on… and not the fact that the government is spending money at all.

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> Anytime the government spends money on anything it prints money to do so. This is how governments work.

I'm sorry but this is complete, total and utter nonsense.

The government is supposed to work by collecting taxes and then spending these taxpayers dollars.

If the government wants to invest in something (like big infrastructure stuff), it's supposed to borrow money (for example by emitting bonds) and then pay that money back (even under keynesianism).

The European Central Bank's mandate specifically says that the ECB's role is to keep inflation in check.

Nowhere is it explained that any government spending can be realized by the government(s) printing money at will.

If balanced, it’s just semantics whether you say that spending is printing money (which is balanced by taxation and bond sales deleting money).

Governments in the general sense are capable of not balancing these items, even if it’s not recommended and sometimes not politically viable. In practice, this is actually the current state of the USA via QE, although I’d argue that doesn’t make QE evil but rather indicates there are some situations where printing money isn’t too bad.

> The government is supposed to work by collecting taxes and then spending these taxpayers dollars.

Not by printing? Where are those taxpayers dollars coming from before they're collected, if they were never printed? Once printed, how is new money moved into circulation? Answer:

The government prints money, which it then distributes into the economy via government spending. It then collects taxes to remove money from circulation.

Your suggestion is the common understanding, but that leaves no room for how the whole cycle starts before money has been printed, and seems to reverse the order of events.

You skipped the part about the Federal Reserve and how its supposed to be semi-independent from the spending of the government - i.e. the government cannot print money but the federal reserve can to fund its operations in the form of buying bonds/securities/etc.

Also the government does not distribute the money via government spending. The Federal Reserve distributes the money and it can do so even without the government by purchasing bonds from the private sector.

Your suggestion is actually the common misunderstanding and it reverses the responsibilities of various institutions in such a way that most people feel they are subjects of their government.

Small update: collecting taxes doesn't remove money from circulation either. Ay-yi-yi, people are misinformed.

The difference between printing money and taxing money is almost nil in many cases. Both increase availability of government funds while reducing the purchasing power of citizens. Printing money is just fewer steps.

Playing my own critic though: printing money is a regressive tax. It causes the same percent inflation for every person's money. The reduced purchasing power hurts lower classes more.

This is not how the US monetary system works at all. Money collected in taxes is DESTROYED. It will never enter the economy again.

>Anytime the government spends money on anything it prints money to do so. This is how governments work.

That's just flatly untrue. This is one of HN's favorite misunderstandings about governments. If this were true, why would governments bother raising taxes or issuing bonds?

Anytime the government spends money on anything it prints money to do so. This is how governments work.

In the US when the government spends on things money it comes from taxes or is borrowed. The Treasury doesn't print money.

Printing money is done by the Federal Reserve, but it is not done to finance general expenditures (bonds are different).

> Anytime the government spends money on anything it prints money to do so. This is how governments work.

According to some economists. Not all economists agree with this.

> Can we debate the ROI of the activity, rather than “inflation bad”, “printing money bad” or “politician bad”?

Essentially you are asking everybody to accept the debated point that you are making (Modern Monetary Theory) and then argue for their position while accepting yours as fact.

I disagree that government must print money in order to spend. We could use a system of private banks and physical backing as a medium of exchange instead of government money. Some countries transact trade in the US dollar. Are those mereley vassal states of the USA?

Traditionally US government proposes a spending program and some means to pay for and congress votes on it. How you pay for it could be through debt, existing funds or increase in taxes. This is something different.

It also muddies the water because it's not explicit how much it will cost, who will bear the burden not to mention no congressional oversight. This isn't like proposing a budget to build bridges. The is unilateral action by one person with unknown consequences.

You're calling something "traditional" (PAYGO) that didn't exist until 1990, was killed in 2000, and was recreated in 2010. Also, that something is "traditional" doesn't make it rational.

I thought you guys wanted government to be run like a business?

I don't think govt. spending is always printing. Normally it spends tax money. I do am against govt. motivated printing (govt debt buying by central banks). As European I've seen my savings decimated last year, +18% yty cpi forecast in UK. When in the road to Venezuelan's 3000% inflation do we realize modern monetary "theory" (read 'agenda') implications?

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