Saturday, June 09, 2012

Why Are We Collecting Taxes?

When the inflation rate is higher than the interest rate, it makes sense for the government to sell more T-bonds at the current incredibly-low interest rate and redeem them with inflated money later.  It's better than free financing, it makes money.

Furthermore, it makes the case that now would be a good time for borrowing to increase dramatically until the interest rates begin to creep up.  We could use the money to invest in things like infrastructure and strategic projects that prepare the ground for a prosperous future.

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