51
votes
Is money we make completely taken away by taxes?
No, this will not happen.
Government does not tax people just for 'shits and giggles'. Governments do not hoard money at some pile as a some sort of dragon from a fantasy novel. Taxes are levied so ...
- 50.2k
34
votes
Accepted
Is zero inflation desirable?
The optimal level of inflation is very debated with unclear answers. There are many reasons, and a great answer would be very long. It should also distinguish between expected inflation and surprises.
...
- 10.6k
19
votes
Is money we make completely taken away by taxes?
Wind the clock back in the other direction: where did this money come from in the first place? The government issued it. Render unto Caesar that which is Caesar's, etc.
You've also chosen to stop your ...
- 558
14
votes
Is zero inflation desirable?
Money is produced at zero social cost but held at a positive private cost (because to hold money you must forgo holding other assets). Therefore there is a positive externality from holding money, ...
- 1,523
14
votes
Accepted
Why lower the deposit rate if it is already negative?
You are assuming that the supply of deposits is zero when the price (the rate) is zero but it definitely is not. There are several reasons for this.
While you can withdraw cash from the bank it is ...
- 16.2k
13
votes
Accepted
Wouldn't abolition of cash give rise to a substitute currency?
"Cash" is an emergent phenomenon of human economic organization. It exists for lots of reasons, as a provider of economic anonymity, a low transaction cost solution to the double-coincidence of wants, ...
- 16.2k
13
votes
Why doesn't the government create money, spend it for free without interest, and recollect it with taxes?
Why doesn't the government create money, spend it for free without interest, and recollect it with taxes, you ask. Well, it does. That's exactly what public investment & spending, and the taxation ...
- 8,103
12
votes
Accepted
Cash and negative interest rates
Actually they're saying that, when cash is available, people need not to deposit their money into the bank, and hence is "guaranteed" (not taking into account risks associated with holding on to cash, ...
- 2,774
12
votes
Accepted
On what basis do countries repay international loans?
Only sufficiently credit worthy countries are able to borrow money internationally in their own currency. In principle you are right that such a country could effectively default by expanding the ...
- 240
10
votes
Is zero inflation desirable?
In the ECB's press conference of October 22, Draghi and his vice-president responded to the question of why the ECB is fighting low inflation so fiercely. Their answer provides a nice overview of why ...
- 913
10
votes
Why can't countries print another country's currency?
Why assuming that it isn't done in the first place? Turns out, it was actually done by Nazis in WWII
https://en.wikipedia.org/wiki/Operation_Bernhard
Also, suppose that somebody actually made ...
- 678
9
votes
What assurances are there that the Federal Reserve does not give money to banks?
According to this official link
Does the Federal Reserve ever get audited?
Yes, the Board of Governors, the 12 Federal Reserve Banks, and the
Federal Reserve System as a whole are all subject to ...
- 32.9k
9
votes
Accepted
Quantitative Easing in Africa
For Quantitative Easing to happen, a central bank needs to expand its balance sheet by, more or less, "printing money" from scratch. Quantitative Easing is a difficult policy in that you want to ...
- 1,276
9
votes
Accepted
The Printing of Money for Paying Debt
Printing money causes inflation because someone (or some institution) will get the money and will spend it somehow. This increases demand for goods, but the number of goods, the supply was not ...
- 28k
9
votes
Accepted
Does control system engineering have a place in economics?
Economists have been exploring control theory applications to macro economics for decades. For example, here is a 40 year-old research paper written in 1976 on the topic.
top of page 2 (also numbered ...
- 1,101
9
votes
Accepted
What is the purpose of monetary expansion during an economic lockdown?
What is the purpose of monetary expansion in this environment?
Avoiding (and preventing future) supply and demand shocks
The purpose is to keep as much as possible markets (labor related, of goods ...
- 1,425
9
votes
Is money we make completely taken away by taxes?
Your calculation is fundamentally wrong because you are forgetting an important factor - the money that government spends.
In your calculation you seem to think that the 10% the government takes in ...
- 218
8
votes
Accepted
What's quantitative easing?
Before the edit, you wrote "qualitative easing", but I think you refer to quantitative easing. I'll discuss both.
Quantitative Easing
Quantitative easing corresponds to the central bank (CB) ...
- 10.6k
8
votes
Accepted
Why do all countries recognize foreign wealth?
Countries do not just stop recognizing foreign wealth because there are two kinds of wealth: real assets, and claims on the production of others; the values of both of these types of wealth are not ...
- 6,335
8
votes
Why do central banks currently favor cheap money policies?
Most central banks' primary goal is maintaining a moderate inflation (around 2 %). In some cases, they also have a secondary and lesser mandate to care for employment numbers.
Since inflation is not ...
- 329
7
votes
How can banks pay interest to the central bank?
You anticipate the answer when you ask:
This question can be easily answered if there were any way in which
new money can leave the central bank without being paid back. Are
there such ...
- 3,732
7
votes
Should Finland leave the eurozone?
The closest we can get to an answer would be by looking at previous exits from currency unions. Rose published a paper studying extensively all exits after WWII.
The abstract resumes well the ...
- 1,276
7
votes
Why should I get a bond with negative interest instead of having a bank deposit account either zero interest or positive interest
It makes little sense to me either, but here are some possible reasons for buying a bond with negative interest rates rather than depositing the same amount in a bank:
The deposit-taking bank may go ...
- 4,717
7
votes
What are taxes for since law forbids printing of money?
"Why I don't hear nobody speaking about such idea?"
Because historical experience says it won't work.
By printing money instead of collecting taxes, what increases is the nominal disposable income....
- 32.9k
7
votes
Accepted
What would monetarists do when interest rates approach zero and become ineffective?
An excellent overview of not just monetarist view on this issue but all other mainstream views on monetary policy at zero lower bound (ZLB) can be found in Ullersma (2002) The Zero Lower Bound on ...
- 50.2k
7
votes
Does Modern Monetary Theory (MMT) provide a useful insight into how to manage the economy?
Does Modern Monetary Theory (MMT) provide a useful insight into how to manage the economy?
That depends on your definition of MMT, because it is not generally agreed on what it even is. You will find ...
- 50.2k
6
votes
Should Finland leave the eurozone?
(I guess a long answer can be fitting to a long question...)
The current state of knowledge as to "how to run a socioeconomic area (SEA)" could be grossly summarized as follows:
There is a ...
- 32.9k
6
votes
Unlimited supply of national currency?
He's being glib. The only constraints on their capacity are political, not from technical constraints or inventory issues. They can make more Kroner by changing their own balances at Danish banks, ...
- 16.2k
Only top scored, non community-wiki answers of a minimum length are eligible