Because if you keep printing money it devalues itself because of the shear amount of currency in the field.
Printing money IS a tax. It's just harder to see. The end is the same though - less wealth for the individual.
Money is nothing more or less than an accounting record of surplus production. The reason you have any money at all is that, like most people in the West, you produce more than you consume. You don't take your pay in cash every Friday and run out and spend it on just enough food, gasoline and rent to get you exactly through the next week until you get paid again. Every week you have a little extra. There are three things you can do with your surplus. Spend it on consumption. A bottle of champagne, a dinner in a restaurant instead of cooking, a movie, a vacation, a fourteenth pair of shoes. This dissipates your surplus. However at the same time you're paying someone else for his services or production, so you're pumping the money back into the economy. Spend it on something durable to improve your life. Replace your old car, refrigerator, computer, buy a house big enough so the baby doesn't have to sleep in your bedroom. Invest it. This turns your surplus into capital. Start your own business, help someone else start or enhance their business by buying stock, or put it in the bank where they will invest it. (They don't just put your hundred-dollar bills in a safe and lock it.) Unless you literally put your hundred-dollar bills under your mattress, anything else you do with them is a transaction that continually updates the value of a dollar. There are only a finite number of goods and services (hours of other people's labor) on which that money can be spent, so in aggregate the economy of your country, and to a lesser extent of the whole planet, keeps adjusting the value of money so every hundred-dollar bill corresponds to a hundred dollars worth of something. If the government starts printing hundred-dollar bills and uses them to pay its employees, contractors and suppliers, before long there will be a whole lot more hundred-dollar bills in circulation. Since the amount of goods and services hasn't changed, what happens is that the value of each hundred-dollar bill decreases. This is called inflation. This isn't the only way inflation can arise, but it is certainly one guaranteed way. The 1930s were called the Great Depression because the factories weren't producing very much, so a lot of people lost their jobs, so they didn't have much money to spend, so the factories couldn't sell their goods, so they cut back on production... a vicious circle. (It was waaaay more complicated than that but this slice of an explanation is good enough for this thread.) The Depression hit Germany harder than most other nations; their economy came close to total collapse. The German government tried to "solve" the problem by printing more money and paying it to people. This did not result in the production of more goods and services. The amount of goods and services remained the same, but the quantity of money (deutsche marks) increased. As a result, the value of the deutsche mark fell. The government kept printing more money, and the value of the deutsche mark kept falling. If you know anyone with a stamp collection, look at the German stamps from the 1930s. At the beginning of the era, a stamp for a letter cost one mark. (I don't remember what the actual number was but let's use this for the sake of the example.) Within a year, it cost ten marks. Then a year later, 100 marks. By the end of the decade--and I am NOT exaggerating; I have some of these stamps--Germany was printing stamps priced at more than ONE MILLION MARKS! People who had saved their whole lives for retirement now discovered that they had enough money to buy a postage stamp. This is what happens when the government prints money.
And yet our government still wants to print more money! Please Register or Log in to view the hidden image!
Today: - The dollar is going down in value relative to other currencies. - The stock market is going up - Gold up Signs of inflation?
No! Not the 1930s and nothing to do with NSDAP. In 1920 it cost a fraction of a Mark to post a letter. In this year, a conspiracy of Jewish bankers embarked on their plan to inflate the German currency. Those in the know were able to buy assets in return for annuities, knowing that the cost of financing the annuities in a worthless currency would be negligible. Many businessmen thought they were being made generous offers they could not refuse, and sold valuable going concerns for what turned out to be a song. Inflation in 1921 and 1922 was modest in comparison with what was in store. Early in 1923, the post office issued a set of 7 stamps with values from 100M to 1000M to cover most postal requirements. It was later in the year that the big collapse happened. In late August, the post office had to begin surcharging its stamps in denominations of thousands and later millions of Marks. Finally, on December 1st, a little while after the highest denomination stamp -- 50,000,000,000M -- had been issued, a new "Gold Currency" was introduced.
Actually, governments around the world use both taxes and printing presses to fill up state coffers. No exceptions. Actually, compound interest finance systems demand constant new money creation, otherwise everything falls apart in a heartbeat. Governments don't really need money. Money will not feed, cloth & arm. Governments need goods, services and labor to take care of government employees and projects. Money is just convenient (and recently invented) shortcut extracting goods, services and labor from populace. Before the age of money governments did OK extracting those things directly. Why governments don't create all their money by printing? The answer lays in the ways newly minted $ are injected into economy. In the USA for new money to enter the system a loan must be made. Who takes loans from Feds directly? Banks, large banks from there newly minted money will gradually spread around. In other words, 100% direct printing is a significant financial risk for the people who counts.
