What about no taxation at all ?

[CitizenCain]

Sure, under Hazir's system it wouldn't make sense to use [government] cash for any purpose anyway. Yo'ud hide your gold under the mattress, and use moonshine or smokes or BitCoins or CainCash (etc.) as the standard medium for exchanging value... which why I really hope the feds try it. No more taxes, and I sure as hell won't be using inflation bucks.

[Hazir]

But all investments would immediately lose value and companies would perish immediately because they'd get no breaks while trying to become profitable :'( And how would companies be able to buy other companies?!

No, what nonsense is this? The value of money would go down, not the value of investments. And It's really funny Americans here are so dead set against it, with their government already pretty much doing what I am suggesting. Just in a more hybrid system, but they are already getting 'inflation government bucks' thrown at them left right and in the middle.

[Loki]

Except money has to be invested the second it's earned, because it loses value a second later. Not too many individuals or corporations earn a sufficient amount of money in the short-term to enable them to make large investments.

[RandBlade]

Hazir, a correction: Today's figures show UK inflation to have fallen to 3.6% - please explain how that is such a "tax" as suggested by the OP that we are already paying? If I could get away with paying just 3.6% tax through any means I'd be delighted.

[Hazir]

Except money has to be invested the second it's earned, because it loses value a second later. Not too many individuals or corporations earn a sufficient amount of money in the short-term to enable them to make large investments.

You could put your money in an equity-based account, or a high yielding savings account. I remember times in Turkey where you'd get double digit interest on a savings account in the local currency.

Oh, another advantage would be by the by that it would be excessively expensive for a country like China to manipulate the exchange rate of its currency.

[Wraith]

You could put your money in an equity-based account, or a high yielding savings account. I remember times in Turkey where you'd get double digit interest on a savings account in the local currency.

Or just use a different currency, which it wouldn't take long to get everybody doing.

[Nessus]

Or just use a different currency, which it wouldn't take long to get everybody doing.

You could jail anyone caught doing that, but that's going into dystopia-scenarios

[GGT]

You could put your money in an equity-based account, or a high yielding savings account. I remember times in Turkey where you'd get double digit interest on a savings account in the local currency.

But we don't have high yield savings accounts, thanks to Bernanke promising to keep rates at zero for another two years.

Or just use a different currency, which it wouldn't take long to get everybody doing.

We already have some different 'currencies' that are better than cash, and keep money flowing in the local community. Even some big chain coupons with fine print saying participation varies works that way. There are people who trade and barter Starbucks bucks for Sheetz gas points, or gift cards less than face value for cash.

[Loki]

How are those better than cash? They face the same inflationary issues (since most of them are denominated in dollars), except they don't get accepted everywhere.

[GGT]

It's only "better" by keeping the money in a community, and helping local businesses. When cash loses its value, bartering that way can work.

[Nessus]

But generally speaking, poor people won't be saving either way, and rich people don't buy their own gas/groceries/condoms, so how much real benefit can there be?

[GGT]

Poor people already barter and trade their skills, instead of using cash.

[Hazir]

Or just use a different currency, which it wouldn't take long to get everybody doing.

In a small country they might have such a problem, but do you really see Americans use another currency than the US dollar? And, which currency could that reasonably be?

[Hazir]

But we don't have high yield savings accounts, thanks to Bernanke promising to keep rates at zero for another two years.

Not very likely though that the FED could continue with zero interest if inflation stands at 15% (just an example).

[Wraith]

In a small country they might have such a problem, but do you really see Americans use another currency than the US dollar? And, which currency could that reasonably be?

Any. Euro's probably the obvious choice. The pound maybe, or possibly even the yen. It doesn't happen much now because the dollar is secure and doesn't have the massive inflationary pressure you want, but that wouldn't take too long to change if we did get it.

[CitizenCain]

Poor people already barter and trade their skills, instead of using cash.

Uh, not just poor people. Everyone with a brain on their shoulders looking to avoid a 30-80%, government-mandated markup on skilled labor does so.

An IT guy, might for example, end up partying out on the West side with a guy who owns a few automotive garages, and save each other thousands of dollars in government-mandated fees and red tape by exchanging services in an informal arrangement, for a purely hypothetical example, which I've been told doesn't quite qualify as tax evasion, and certainly should not be prosecuted as such. Hypothetically. Or have $10,000+ worth of "home improvement" work done by a small contracting company in exchange for the same value of his labor. In theory. *ahem*

[Hazir]

Any. Euro's probably the obvious choice. The pound maybe, or possibly even the yen. It doesn't happen much now because the dollar is secure and doesn't have the massive inflationary pressure you want, but that wouldn't take too long to change if we did get it.

As much as I am in favour of the euro I don't really think it would become the currency of choice in the US. You are probably right in thinking it is one of the currencies that could (with some mental gymnastics) be in such a position. Another I could see is the Yuan and maybe the Yen. The pound is not going to happen; the UK government would be forced to flood the planet with pounds in order to keep the country in business, and if it didn't the UK economy would collapse making it a currency based on nothing.

[Hazir]

Uh, not just poor people. Everyone with a brain on their shoulders looking to avoid a 30-80%, government-mandated markup on skilled labor does so.

An IT guy, might for example, end up partying out on the West side with a guy who owns a few automotive garages, and save each other thousands of dollars in government-mandated fees and red tape by exchanging services in an informal arrangement, for a purely hypothetical example, which I've been told doesn't quite qualify as tax evasion, and certainly should not be prosecuted as such. Hypothetically. Or have $10,000+ worth of "home improvement" work done by a small contracting company in exchange for the same value of his labor. In theory. *ahem*

I am wondering why you think dealing with higher inflation is worse than government having its fingers in your wallet all the time. Not to mention in such a way that goverment keeps a very precise record of your dealings.

[CitizenCain]

I am wondering why you think dealing with higher inflation is worse than government having its fingers in your wallet all the time.

It's not, but the simple fact of the matter is that people won't use inflation bucks and will instead use a medium of exchange that doesn't lose 30% of its value a year. There are modern examples of this very thing going on, and what happens, exactly, is that people and businesses stop accepting the government currency with as payment, and insist on another currency or medium, which results in people not using it (or accepting it for their labor) and puts the government currency into a devaluation death spiral. Within months or years, you see government bank notes for denominations in the millions and billions, and before you know it, Z$100 billion won't even buy you a pack of smokes. (You can now buy mint, never circulated Zimbabwe denomination notes as novelty items. I, for example, am a quadrillionaire, if you count my Zimbabwe dollars, which include bills that have a denomination of 100 trillion.)

Seriously, check out the graph of inflation rates here.

Granted, a modern country without the same problems as Zimbabwe won't have it as bad, but with sustained, mid/low double digit inflation per annum, total currency abandonment is a certainty, and if you read up on Zimbabwe, you'll see that even before hyper inflation kicked in and people were changing their inflation bucks for something else multiple times a day, most people didn't use the official government currency, and instead sold it on the black market for non-inflating currencies, which functioned as the country's primary medium of exchange.

Not to mention in such a way that goverment keeps a very precise record of your dealings.

Yeah, they try, but I'm a hell of lot smarter than the government, so you can guess how complete and accurate a job they actually manage to do with that.

[Hazir]

It's not, but the simple fact of the matter is that people won't use inflation bucks and will instead use a medium of exchange that doesn't lose 30% of its value a year. There are modern examples of this very thing going on, and what happens, exactly, is that people and businesses stop accepting the government currency with as payment, and insist on another currency or medium, which results in people not using it (or accepting it for their labor) and puts the government currency into a devaluation death spiral. Within months or years, you see government bank notes for denominations in the millions and billions, and before you know it, Z$100 billion won't even buy you a pack of smokes. (You can now buy mint, never circulated Zimbabwe denomination notes as novelty items. I, for example, am a quadrillionaire, if you count my Zimbabwe dollars, which include bills that have a denomination of 100 trillion.)

Seriously, check out the graph of inflation rates here.

Granted, a modern country without the same problems as Zimbabwe won't have it as bad, but with sustained, mid/low double digit inflation per annum, total currency abandonment is a certainty, and if you read up on Zimbabwe, you'll see that even before hyper inflation kicked in and people were changing their inflation bucks for something else multiple times a day, most people didn't use the official government currency, and instead sold it on the black market for non-inflating currencies, which functioned as the country's primary medium of exchange.



Yeah, they try, but I'm a hell of lot smarter than the government, so you can guess how complete and accurate a job they actually manage to do with that.

I know the Zimbabwe scenario of course. But as you point out yourself, most countries are not Zimbabwe and would strive not to become one. Growth can effectively make the inflationary effects of money printing smaller than the actual money supply would suggest. Also, the people would have an interest in using their government issued currency as this is their shield against the other kind of taxation by the government. Which comes with an excessively difficult tax-code, many loopholes, and immense costs for collection. Living with the present system or a return to it from monetary funding could easily be less attractive.

In Turkey, with it's high inflation (which was not offset by a modern economy at the time) there was limited evasion of the Turkish Lira by the people. Some contracts would be in DM or $, but other's would simply take into account that inflation would be expected to be somewhere in the mid-double digits. Turkey's biggest bank note had a nominal value of 20,000,000.-- TL with a counter value in American dollars of about $45 IIRC.

And, you may be good at keeping the government in the dark about what you do, but wouldn't it even be better if they have no vested interest in checking upon what you do?

[Wraith]

Do you want this for the Euro?

[CitizenCain]

And, you may be good at keeping the government in the dark about what you do

Don't get me wrong; I'm very much in favor of this idea, it just won't work for what you want it to do. Tax people through inflation and they will simply use a currency that doesn't inflate by design as a very simple and relatively convenient way to get around paying taxes. And I'm all about paying no taxes. Argentina tried something similar in recent history, and as a result, (at the height of the experiment) 80% of Argentinians had their savings in foreign bank accounts, in a different currency, which is the bare minimum of what's bound to happen if any government implements this idea - its citizens will keep their money somewhere else, in another currency, even if it doesn't rise to the level of currency abandonment for day-to-day transactions.

but wouldn't it even be better if they have no vested interest in checking upon what you do?

Yeah, well it takes more than income tax elimination to achieve that. Even without taxation issues, the government seems to have a vested interest in monitoring and regulating every other non-commercial transaction, from whom I fuck and for what purpose to how I achieve the the elevated endorphin levels associated with the state of happiness, and even into what means I use to protect myself and my possessions.

No amount of tinkering with the tax code is going to change the fact that democratic government has an inherently vested interest in interfering with the lives and behaviors of all its citizens (and non-citizen residents), even when those behaviors are completely consensual and do no harm to others.

[Hazir]

Do you want this for the Euro?

The thing is that is already happening to a certain extent in a bunch of countries. Not taken to the extreme that I suggest here, but in the US and UK you call it QE, in the eurozone it's LTRO, doing pretty much the same thing. I think if this model of financing government would catch on the leakage CC is describing (foreign currency savings) could be fairly limited. But even if it weren't that limited; isn't it wonderful to think of a system in which voters get to vote in elections, and with their money if governments overspend?