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May 16, 2012 at 1:16 am
#15677
Member
The way I usually explain it to friends is that there are 3 ways the government pays for stuff.
1.) Taxes – paid by today’s workers [Has political limits]
2.) Borrowed debt – paid for by tomorrow’s workers (aka: next generation pays taxes to pay for today’s spending) [has credit limits]
3.) Inflation – paid by the ones who get the created money last (by paying the prices that have reacted to the influx of currency) [The hidden tax – currency viability limit]