Aibu to ask about my understanding of money and economics and think a lot of people don't understand it?
Speaking to some people last week they think money works like a household budget and some even thought the gold standard was a thing and hadn't heard of fiat currency.
With all the news of the economy being damaged. I was hoping someone could explain if I am on the right track or not?
Looking at these principles
Fiat currency
1 Can pay for goods, services, and financial assets without a need to collect money in the form of taxes or debt issuance in advance of such purchases;
2 Cannot be forced to default on debt denominated in its own currency;
3 Is only limited in its money creation and purchases by <a class="break-all" href="https://en.m.wikipedia.org/wiki/Inflation" rel="nofollow" target="_blank">inflation</a>, which accelerates once the real resources (labour, capital and natural resources) of the economy are utilized at <a class="break-all" href="https://en.m.wikipedia.org/wiki/NAIBER" rel="nofollow" target="_blank">full employment</a>;
4 Can control <a class="break-all" href="https://en.m.wikipedia.org/wiki/Demand-pull_inflation" rel="nofollow" target="_blank">demand-pull inflation</a>[13] by taxation which remove excess money from circulation (although the political will to do so may not always exist);
So does this essentially mean?
The government can print money and they do? There is no such thing as ' tax payers money' as such and this is used as an emotive term? Tax on the other hand is used to control inflation. But the tax is very much a political view based on who should be taxed? ( income, goods, capital gains, the big companies, rich, land assetts)
So as long as we can control inflation (which zimbabwe didn't) we are a long way off this being an issue.
Does this mean the debt is essentially pointless too? Also used as emotion and justification for austerity. Do we need to pay it back? Looking at main stream money economics?
Also in 2008 the QE was given to the banks whereas this time its to the people so more oil running through the machine.
I am finding it all very complicated.
Can anyone help?