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<p>[QUOTE=&quot;Numbers, post: 1207085, member: 11668&quot;]Either I&#039;m not following your point, or your terminology makes no sense.</p><p><br /></p><p>You&#039;re proposing a hypothetical currency that wouldn&#039;t be redeemable.&nbsp; The government prints up a piece of paper, and says that this piece of paper <i>is</i> twenty dollars.&nbsp; Not that it represents twenty dollars&#039; worth of gold that&#039;s stored in a vault in Washington; not that it entitles the bearer to receive twenty dollars at some future date; but that it <i>is twenty dollars</i>, end of story.</p><p><br /></p><p>In order to explain why anyone would want these pieces of paper, you say that the government will accept them for tax payments.&nbsp; That appears to raise two problems.</p><p><br /></p><p>First, how is that different from redeemability?&nbsp; Under the current system, a certain fraction of tax receipts has to be used to make payments on the debt.&nbsp; Under your system, a certain fraction of tax receipts will be received in the form of your unredeemable paper.&nbsp; Either way, the amount of funds actually available to the government for spending is less than the amount collected in taxes.&nbsp; Either way, government spending in the past is being paid for out of current tax receipts.&nbsp; You define your proposed pieces of paper to be &quot;debt-free money&quot;, but they sure do look like debts and quack like debts....</p><p><br /></p><p>Second, why would these pieces of paper have value to anyone who didn&#039;t pay U.S. taxes?&nbsp; Under our present system, the great majority of Federal Reserve Notes circulate outside U.S. borders.&nbsp; It&#039;s not clear that your proposed currency could do this.&nbsp; It doesn&#039;t seem very sensible for the U.S. to adopt a currency that wouldn&#039;t be usable in international trade.</p><p><br /></p><p>(As a related issue, are we all supposed to pay our taxes in person by handing over these pieces of paper?&nbsp; It&#039;d be a bit difficult to file electronically under your system!)</p><p><br /></p><p>To address your other point, the people <i>did</i> decide, some 98 years ago, that it&#039;s better not to put the &quot;political class&quot; in direct control of the money supply--precisely <i>because</i> the politicians must stand for election, which makes them highly likely to do things that look good in the short run and have disastrous consequences in the long run.</p><p><br /></p><p>Democracy is a great system in a lot of ways, but it tends to operate under a dreadfully short time horizon.&nbsp; That&#039;s why we installed the benevolent despots at the Fed: they&#039;ll be more likely to strike a reasonable balance between present and future considerations.&nbsp; The Fed is hardly &quot;unaccountable&quot;; rather, it&#039;s less <i>directly</i> accountable, and less <i>immediately</i> accountable, than are the elected politicians.&nbsp; That buffer between the Fed and the voters is what allows the Fed to do its job.[/QUOTE]</p><p><br /></p>

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