Dr. Martin Hash Podcast

Under the right circumstances, governments don't have to collect any taxes yet can still continue to spend even more money. This sounds pretty amazing, how come you never hear about it? I wonder about that myself: I think it's because almost everyone conflates economics with accounting, and can't imagine anything other than debits & credits. You do hear how expansion of the economy is a good thing: more jobs, more production, more consumption; so there are people out there who know the secret. It's simple really, here's how it works: consumption must be increasing, combined with a dash of inflation. For example, if consumption is increasing by 5% per year, plus 5% inflation, with a GNP of $12 trillion, those fiscal pressures would require printing $1.2 trillion worth of new money, which happens to be the size of the current U.S. budget, no taxes need be collected.

Inflation is the key because it's the most flexible and can offset any softness in consumption. Inflation is also a rough form of wealth redistribution which is good, and it depresses the demand for borrowed money which is also good, but it also depresses consumption, which is a bad thing in this scenario. Also, productivity must be kept equal to consumption or inflation will spiral out of control. Because productivity must be increasing, and productivity comes from investment, rich people get richer. To prevent that from creating an aristocracy, government must redistribute the wealth, which means more spending, which is consumption; the feedback loop is completed and the cycle can continue forever.