My new video, out this morning, addresses a critical question.
As I say in the video, this is a theme I will return to. There are many dimensions to this issue, and if what you were expecting is not in here it is probably scheduled to be in another one soon.
Comments are, of course, welcome.
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If it ‘s taxpayers’ money surely the taxpayer should be signing the banknote? I suggest it’s the tax receiver’s money:
http://www.progressivepulse.org/economics/taxpayers-money-doesnt-exist-and-is-in-the-hands-of-the-receivers
Possible addition to the show notes:
https://www.newmoneyhub.com/www/money/mitchell-innes/what-is-money.html
https://www.newmoneyhub.com/www/money/mitchell-innes/the-credit-theory-of-money.html
The smack down of Adam Smith in those is immensely pleasurable.
Liked the video – one of its key merits it is simplicity. With that in mind, with some caution I would suggest an improvement is that taxes are only one example of things that give money its value. In general any payment that is required to be made to the government in its local currency give it value. Taxes are one example, others include fines and licences (eg marriage licence). This may seem a little pedantic. However, many studies of the evolution of money suggest that fines and licences (especially marriage) were a common factor in its initial creation. Of course, it could be argued that these are all types of special ‘taxes’, but it is useful to understand that money existed before ‘taxes’ in the common meaning of the term existed.
Simon
Thanks – but I am going for simplicity and the here and now
It’s simply not possible to cover all chance, but over time I imagine a whole series on money
The plan is to make 250 videos and there will be more on money in that lot
250! A herculean task, but one I’m sure you’re well up to.
I am enjoying the video series so far – thank you once again for your work 🙂
It keeps the old grey cells busy, that’s for sure…
I can live with that
Unscripted they’re a challenge….
Richard many thanks for this. It feels like it’s taken me longer than most to get my head around this but hopefully I’m getting there, so I really appreciate the time you’re taking to educate us lay people.
In this spirit I hope you don’t mind a silly question..
I think I understand that tax gives money it’s value, and you said we can use the government’s money but they can never use ours; so what actually happens to the taxes raised by HMRC?
My understanding so far is that it is used ultimately for government spending but in reality the tax system is simply recycling money already created by the government. Hope you can help and apologies for being slow!
I’m making one on this – maybe this Friday
But the reality is it is destroyed
Money is a promise
When the promise is fulfilled the money goes away – it no longer exists – there is nothing left
That’s what happens when the tax debt is paid – the money no longer exists
Sop tax revenue is not used to pay for spending – it only cancels tax debt
New money pays for spending
And so the cycle goes on….
Remember money has no physical existence at all
It sounds to me like there are two money creators – governments and banks. The government spends money into the economy and destroys it through taxes. But the money they spend is surely no different than the money banks lend and demand back with interest except that governments might invest in education, healthcare etc and their returns would be a healthy intelligent population who is fit to be productive and therefore pays taxes, which destroys the money and keeps inflation low. But the banks are also creating money our of thin air. They do not need asset backing so are on a par with the government. Am I missing something?
Banks do create money – but entirely under government licence
And of course, the money they create is government money – it is pounds
And they too destroy money – when loans come to an end