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RE: NULL

in #economics6 years ago

There are so many articles which answer the questions you've raised, but you may prefer to watch videos on You Tube which explain it.

In 2000, the "Fast-Track Land Reform Program" resulted in an enormous decrease in production in Zimbabwe. The government kept spending as though they still had the same size economy, so they ended up with too much money chasing too few goods which caused hyperinflation.

Taxation is primarily a tool for controlling inflation. In countries with their own floating currency, it isn't used to collect money for the government to spend. The central bank creates money every time the government spends - something I've verified with several central banks.

In countries which aren't monetary sovereigns, such as Timor-Leste (they use the US dollar), the government has to tax before they can spend. Same with Greece and other Eurozone countries - they surrendered sovereignty to the ECB and it doesn't create money every time they want to spend. That's why they have austerity.