Optimal tax system - OzChess

**Hayek** · 02-08-2012, 05:12 PM

If you could set the tax system for your country what would you do? A complex system of many different taxes or a simpler system? Progressive or regressive? Flat? Who would you try to place most of the tax burden on if anyone? And why would you choose what you would?

I would go for some sort of nominally progressive consumption tax probably and would try to keep the tax system fairly simple to reduce loopholes etc.

**Firegoat7** · 02-08-2012, 07:31 PM

Originally Posted by Hayek

If you could set the tax system for your country what would you do?

Tax credit ie cards and loans

Originally Posted by Hayek

And why would you choose what you would?

Increase savings and make financial institutions more responsible towards the current community.

**antichrist** · 02-08-2012, 08:22 PM

Originally Posted by Hayek

If you could set the tax system for your country what would you do? A complex system of many different taxes or a simpler system? Progressive or regressive? Flat? Who would you try to place most of the tax burden on if anyone? And why would you choose what you would?

I would go for some sort of nominally progressive consumption tax probably and would try to keep the tax system fairly simple to reduce loopholes etc.

If you simplify you can encourage and lock in dysfunctional aspects that can distort incentives and the economy. It can also make it more unjust.

It must be fluid to respond to new circumstances. In many cases it's complexity is due to previous laws not having sunset clauses when they are made redundant. So that we continue to have the old operating alongside the new law, depending on when the event originally took place is how it is treated. But sunshine clauses can cause injustice as the govt changes law as go, maybe someone would not have made the same decision if they knew the circumstances of how it would be treated would change.

How would a progressive consumption tax be applied - higher on luxury goods?
If such taxation effects consumer consumption greatly it could make it infeasible to produce that product at all. Providing that is desirable it is okay.

There are many complexities, too much for commenting on in spare time.

**Hayek** · 02-10-2012, 05:28 PM

Originally Posted by Firegoat7

Tax credit ie cards and loans

Increase savings and make financial institutions more responsible towards the current community.

You are taxing credit and loans yet want to increase savings? As far as the tax system itself, that it somewhat counter productive as savings is what feeds credit.

Originally Posted by antichrist

If you simplify you can encourage and lock in dysfunctional aspects that can distort incentives and the economy. It can also make it more unjust.

And you think the current systems do not distort incentives? The point is in distorting incentives to favor long-term stability while being able to pay off the bills.

Originally Posted by antichrist

How would a progressive consumption tax be applied - higher on luxury goods?

Something like a VAT could do it.

Originally Posted by antichrist

If such taxation effects consumer consumption greatly it could make it infeasible to produce that product at all. Providing that is desirable it is okay.

I am for minimal taxation, but either way, a VAT type of tax tends to have a lot less of a Laffer problem than many current taxes like income, etc.

**Firegoat7** · 02-10-2012, 05:41 PM

Originally Posted by Hayek

You are taxing credit and loans yet want to increase savings? As far as the tax system itself, that it somewhat counter productive as savings is what feeds credit.

You are going to have to explain how, in your opinion, savings feed credit. My idea is to simply tax credit transactions (ie cards and loans). Every time somebody uses a credit card take a minimum of 1$ out in government tax.

**antichrist** · 02-10-2012, 05:44 PM

Originally Posted by Hayek

I am for minimal taxation, but either way, a VAT type of tax tends to have a lot less of a Laffer problem than many current taxes like income, etc.

income tax being usually progressive, allows more money for poorer people to purchase necessities etc, and greater tax on wealthy does not prevent them from purchasing luxuries etc as still have plenty left over. Money is not everything - having a widespread happiness amongst all population is more important. The govt is also important for providing infrastructure, health etc so they need their share

**Hayek** · 02-10-2012, 06:13 PM

Originally Posted by Firegoat7

You are going to have to explain how, in your opinion, savings feed credit. My idea is to simply tax credit transactions (ie cards and loans). Every time somebody uses a credit card take a minimum of 1$ out in government tax.

Well where do you think the loans, etc. originate from? I am not sure why you want to tax credit cards thought. I am guessing it is for some Pigovian reason? If so, my response would be that credit cards are not inherently bad and neither is credit or loans- both have actually had tremendous positive effects on world economies and theoretically undoubtedly could.

Originally Posted by antichrist

income tax being usually progressive, allows more money for poorer people to purchase necessities etc, and greater tax on wealthy does not prevent them from purchasing luxuries etc as still have plenty left over.

What's your point? I said I want a progressive (nominal) tax too, I just think a progressive consumption tax makes more sense due to reduced Laffer effects and increased effectiveness.

Originally Posted by antichrist

Money is not everything - having a widespread happiness amongst all population is more important. The govt is also important for providing infrastructure, health etc so they need their share

Again not sure what this comment has to do with anything. Some tax systems are better than others. No country uses every single tax. The US for example has an income tax but no VAT. I am saying that I think a VAT would probably be better and could replace the current income and corporate taxes (and possibly capital gains too) if implemented properly.

**antichrist** · 02-10-2012, 07:19 PM

but the misers will stop spending on luxuries and unnecessities to save on tax, so the whole economy slows down and less money for infrastructure etc - good for the environment though

**Hayek** · 02-11-2012, 08:31 AM

Originally Posted by antichrist

but the misers will stop spending on luxuries and unnecessities to save on tax, so the whole economy slows down and less money for infrastructure etc - good for the environment though

I highly doubt that people will stop buying luxuries given the culture. That aside, if the recent crises suggest more saving (which means more real investment) would not be a bad thing :p Also, investment/saving is arguably much better for the economy than buying silly toys over the long run. You might lose some revenue on the toys, but the production gains (and the tax on that production [as it most certainly requires consumption too]) will likely easily outweigh that revenue while growing the economy over the long run.

**Firegoat7** · 02-11-2012, 12:20 PM

Originally Posted by Hayek

Well where do you think the loans, etc. originate from?

Clearly it appears that we both believe different things.I do not believe that when a financial institution lends credit that they have 100% of stock in reserve.

In 1971 the US government no longer guaranteed Gold against the dollar. In effect, money became unsecured credit. Money is no longer created by governments printing against a guaranteed gold reserve. It is created by financial institution lending through debt. In 1997 a UK study estimated that over 97% of money had been created by debt, since only 3% of the currency physically existed in a printed form of notes and coins. Banks do not secure loans against cash reserves in stock. They secure against a promise to pay against a fraction of the cash stock. If the promise to pay becomes worthless, like recent financial meltdowns in 2008, then financial institutions fail.

Originally Posted by Hayek

I am not sure why you want to tax credit cards

Credit cards force future generations to pay for economic growth. The 15-20% interest that the financial institution charges must be paid back from the real economy. Since the interest charged creates money, it is only fair, in my opinion that a tax is paid to service the economic growth.

**Hayek** · 02-11-2012, 07:47 PM

Originally Posted by Firegoat7

Clearly it appears that we both believe different things.I do not believe that when a financial institution lends credit that they have 100% of stock in reserve.

I never said that financial institutions operate as full reserve banks :p

Originally Posted by Firegoat7

In 1971 the US government no longer guaranteed Gold against the dollar. In effect, money became unsecured credit. Money is no longer created by governments printing against a guaranteed gold reserve. It is created by financial institution lending through debt. In 1997 a UK study estimated that over 97% of money had been created by debt, since only 3% of the currency physically existed in a printed form of notes and coins. Banks do not secure loans against cash reserves in stock. They secure against a promise to pay against a fraction of the cash stock.

This is not necessarily a bad thing. As the demand for money goes up, surely some monetary growth is not a bad thing to stop deflation.

Originally Posted by Firegoat7

If the promise to pay becomes worthless, like recent financial meltdowns in 2008, then financial institutions fail.

That was a case of over-leveraging. Reserve requirements and generally leveraging opportunities are controlled by the Fed and the government- if set correctly they can be stable. The problem we saw is not inherent to fractional reserve banking.

Originally Posted by Firegoat7

Credit cards force future generations to pay for economic growth.

Inherently, no.

Originally Posted by Firegoat7

The 15-20% interest that the financial institution charges must be paid back from the real economy. Since the interest charged creates money, it is only fair, in my opinion that a tax is paid to service the economic growth.

Not sure where you are getting the 15-20% from. Are you talking about credit card debt? All people who use credit cards do not have credit card debt. Credit cards inherently only make transactions easier to do as there is less hassle than money. Taxing people in debt will only put them in more debt.

**Firegoat7** · 02-11-2012, 08:41 PM

Originally Posted by Hayek

Inherently, no.

Let me get this straight. Credit debt creates money and you believe that it doesn't therefore create economic growth. I guess you are from the camp that asks people to offer opinions, but doesn't like to hear other peoples opinions if they disagree with your viewpoint. So be it, Do you even play chess?

**Hayek** · 02-12-2012, 08:21 AM

Originally Posted by Firegoat7

Credit debt creates money and you believe that it doesn't therefore create economic growth.

I did not say any of that. First of all credit card debt does not create money. Second, I did not say anything about credit card debt and economic growth- there isn't necessarily any straightforward causal relationship there.

Originally Posted by Firegoat7

I guess you are from the camp that asks people to offer opinions, but doesn't like to hear other peoples opinions if they disagree with your viewpoint.

What are you talking about? When did I say that? You said credit card debt forces future generations to pay for credit card debt. I said that is no inherently true. What I said is FACT, not an opinion. Let me give you an example. I buy a $20 video game with my credit card. Come payment time I have no money, so I defer payment until the next month when with interest I have to pay $23. By then I save up $23 and pay it off that month. How did this force future generations to pay anything?

All that aside, how are you claiming that credit card debt forces future generations to pay for economic growth? Economic growth is not the same as current spending.

**Firegoat7** · 02-12-2012, 09:49 AM

Originally Posted by Hayek

I did not say any of that. First of all credit card debt does not create money.

Like I said before we believe entirely different things.

Originally Posted by Hayek

Second, I did not say anything about credit card debt and economic growth- there isn't necessarily any straightforward causal relationship there.

You keep on claiming that debt doesn't create money.

Originally Posted by Hayek

What are you talking about? When did I say that? You said credit card debt forces future generations to pay for credit card debt. I said that is no inherently true. What I said is FACT, not an opinion.

You are entitled to your opinion. I believe your opinion is not factual.

Originally Posted by Hayek

Let me give you an example. I buy a $20 video game with my credit card. Come payment time I have no money, so I defer payment until the next month when with interest I have to pay $23. By then I save up $23 and pay it off that month. How did this force future generations to pay anything?

The party that collected the debt made $3. This is $3 that was not in the economy prior to the credit. Therefore the economy has grown by $3.

Originally Posted by Hayek

All that aside, how are you claiming that credit card debt forces future generations to pay for economic growth? Economic growth is not the same as current spending.

The debt is paid in the future i.e not the past or present

**Hayek** · 02-12-2012, 10:19 AM

Lol, you can't say that matters of fact are subject to opinions. Whether or not credit card debt creates money is not a matter of opinion. Do you also want to argue that the fact "humans give birth to live young" is subject to opinion? Facts are facts.

Originally Posted by Firegoat7

The party that collected the debt made $3. This is $3 that was not in the economy prior to the credit. Therefore the economy has grown by $3.

No, because the person who paid the $23 did not pay $20 of real money and then just print the other $3. He just got $23 from someone else- it was not created. The way currency is created in modern economies is at the banking level through fractional reserve banking (loans created vs. reserves) and through central bank operations.

Originally Posted by Firegoat7

The debt is paid in the future i.e not the past or present

Okay, but in my example it is not future generations, just the future self of the same person. Which is why I said your original statement was not inherently true.

02-08-2012, 05:12 PM	#1 (permalink)
Hayek Member Join Date: Apr 2010 Posts: 93	Optimal tax system If you could set the tax system for your country what would you do? A complex system of many different taxes or a simpler system? Progressive or regressive? Flat? Who would you try to place most of the tax burden on if anyone? And why would you choose what you would? I would go for some sort of nominally progressive consumption tax probably and would try to keep the tax system fairly simple to reduce loopholes etc.

02-08-2012, 07:31 PM	#2 (permalink)
Firegoat7 Moderator Join Date: Sep 2007 Location: Getting owned by White in the Dragon and trying to recover lost positions from shock paralysis OTB Posts: 2,044 ICC Handle: guest	Originally Posted by Hayek If you could set the tax system for your country what would you do? Tax credit ie cards and loans Originally Posted by Hayek And why would you choose what you would? Increase savings and make financial institutions more responsible towards the current community. __________________ "...What I meant? Dear Mr Ian Rout (ACF news publisher) could you please put Ozchessforum in the next news letter! There is no reason to hide this forum from the Australian chess public. What they meant? Sorry, No english!- Amir Karibasic

02-08-2012, 08:22 PM	#3 (permalink)
antichrist Senior Member Join Date: Feb 2009 Location: Byron Bay, NSW Posts: 2,821	Originally Posted by Hayek If you could set the tax system for your country what would you do? A complex system of many different taxes or a simpler system? Progressive or regressive? Flat? Who would you try to place most of the tax burden on if anyone? And why would you choose what you would? I would go for some sort of nominally progressive consumption tax probably and would try to keep the tax system fairly simple to reduce loopholes etc. If you simplify you can encourage and lock in dysfunctional aspects that can distort incentives and the economy. It can also make it more unjust. It must be fluid to respond to new circumstances. In many cases it's complexity is due to previous laws not having sunset clauses when they are made redundant. So that we continue to have the old operating alongside the new law, depending on when the event originally took place is how it is treated. But sunshine clauses can cause injustice as the govt changes law as go, maybe someone would not have made the same decision if they knew the circumstances of how it would be treated would change. How would a progressive consumption tax be applied - higher on luxury goods? If such taxation effects consumer consumption greatly it could make it infeasible to produce that product at all. Providing that is desirable it is okay. There are many complexities, too much for commenting on in spare time.

02-10-2012, 05:28 PM	#4 (permalink)
Hayek Member Join Date: Apr 2010 Posts: 93	Originally Posted by Firegoat7 Tax credit ie cards and loans Increase savings and make financial institutions more responsible towards the current community. You are taxing credit and loans yet want to increase savings? As far as the tax system itself, that it somewhat counter productive as savings is what feeds credit. Originally Posted by antichrist If you simplify you can encourage and lock in dysfunctional aspects that can distort incentives and the economy. It can also make it more unjust. And you think the current systems do not distort incentives? The point is in distorting incentives to favor long-term stability while being able to pay off the bills. Originally Posted by antichrist How would a progressive consumption tax be applied - higher on luxury goods? Something like a VAT could do it. Originally Posted by antichrist If such taxation effects consumer consumption greatly it could make it infeasible to produce that product at all. Providing that is desirable it is okay. I am for minimal taxation, but either way, a VAT type of tax tends to have a lot less of a Laffer problem than many current taxes like income, etc.

02-10-2012, 05:41 PM	#5 (permalink)
Firegoat7 Moderator Join Date: Sep 2007 Location: Getting owned by White in the Dragon and trying to recover lost positions from shock paralysis OTB Posts: 2,044 ICC Handle: guest	Originally Posted by Hayek You are taxing credit and loans yet want to increase savings? As far as the tax system itself, that it somewhat counter productive as savings is what feeds credit. You are going to have to explain how, in your opinion, savings feed credit. My idea is to simply tax credit transactions (ie cards and loans). Every time somebody uses a credit card take a minimum of 1$ out in government tax. __________________ "...What I meant? Dear Mr Ian Rout (ACF news publisher) could you please put Ozchessforum in the next news letter! There is no reason to hide this forum from the Australian chess public. What they meant? Sorry, No english!- Amir Karibasic

02-10-2012, 05:44 PM	#6 (permalink)
antichrist Senior Member Join Date: Feb 2009 Location: Byron Bay, NSW Posts: 2,821	Originally Posted by Hayek I am for minimal taxation, but either way, a VAT type of tax tends to have a lot less of a Laffer problem than many current taxes like income, etc. income tax being usually progressive, allows more money for poorer people to purchase necessities etc, and greater tax on wealthy does not prevent them from purchasing luxuries etc as still have plenty left over. Money is not everything - having a widespread happiness amongst all population is more important. The govt is also important for providing infrastructure, health etc so they need their share

02-10-2012, 06:13 PM	#7 (permalink)
Hayek Member Join Date: Apr 2010 Posts: 93	Originally Posted by Firegoat7 You are going to have to explain how, in your opinion, savings feed credit. My idea is to simply tax credit transactions (ie cards and loans). Every time somebody uses a credit card take a minimum of 1$ out in government tax. Well where do you think the loans, etc. originate from? I am not sure why you want to tax credit cards thought. I am guessing it is for some Pigovian reason? If so, my response would be that credit cards are not inherently bad and neither is credit or loans- both have actually had tremendous positive effects on world economies and theoretically undoubtedly could. Originally Posted by antichrist income tax being usually progressive, allows more money for poorer people to purchase necessities etc, and greater tax on wealthy does not prevent them from purchasing luxuries etc as still have plenty left over. What's your point? I said I want a progressive (nominal) tax too, I just think a progressive consumption tax makes more sense due to reduced Laffer effects and increased effectiveness. Originally Posted by antichrist Money is not everything - having a widespread happiness amongst all population is more important. The govt is also important for providing infrastructure, health etc so they need their share Again not sure what this comment has to do with anything. Some tax systems are better than others. No country uses every single tax. The US for example has an income tax but no VAT. I am saying that I think a VAT would probably be better and could replace the current income and corporate taxes (and possibly capital gains too) if implemented properly.

02-10-2012, 07:19 PM	#8 (permalink)
antichrist Senior Member Join Date: Feb 2009 Location: Byron Bay, NSW Posts: 2,821	but the misers will stop spending on luxuries and unnecessities to save on tax, so the whole economy slows down and less money for infrastructure etc - good for the environment though

02-11-2012, 08:31 AM	#9 (permalink)
Hayek Member Join Date: Apr 2010 Posts: 93	Originally Posted by antichrist but the misers will stop spending on luxuries and unnecessities to save on tax, so the whole economy slows down and less money for infrastructure etc - good for the environment though I highly doubt that people will stop buying luxuries given the culture. That aside, if the recent crises suggest more saving (which means more real investment) would not be a bad thing :p Also, investment/saving is arguably much better for the economy than buying silly toys over the long run. You might lose some revenue on the toys, but the production gains (and the tax on that production [as it most certainly requires consumption too]) will likely easily outweigh that revenue while growing the economy over the long run.

02-11-2012, 12:20 PM	#10 (permalink)
Firegoat7 Moderator Join Date: Sep 2007 Location: Getting owned by White in the Dragon and trying to recover lost positions from shock paralysis OTB Posts: 2,044 ICC Handle: guest	Originally Posted by Hayek Well where do you think the loans, etc. originate from? Clearly it appears that we both believe different things.I do not believe that when a financial institution lends credit that they have 100% of stock in reserve. In 1971 the US government no longer guaranteed Gold against the dollar. In effect, money became unsecured credit. Money is no longer created by governments printing against a guaranteed gold reserve. It is created by financial institution lending through debt. In 1997 a UK study estimated that over 97% of money had been created by debt, since only 3% of the currency physically existed in a printed form of notes and coins. Banks do not secure loans against cash reserves in stock. They secure against a promise to pay against a fraction of the cash stock. If the promise to pay becomes worthless, like recent financial meltdowns in 2008, then financial institutions fail. Originally Posted by Hayek I am not sure why you want to tax credit cards Credit cards force future generations to pay for economic growth. The 15-20% interest that the financial institution charges must be paid back from the real economy. Since the interest charged creates money, it is only fair, in my opinion that a tax is paid to service the economic growth. __________________ "...What I meant? Dear Mr Ian Rout (ACF news publisher) could you please put Ozchessforum in the next news letter! There is no reason to hide this forum from the Australian chess public. What they meant? Sorry, No english!- Amir Karibasic

02-11-2012, 07:47 PM	#11 (permalink)
Hayek Member Join Date: Apr 2010 Posts: 93	Originally Posted by Firegoat7 Clearly it appears that we both believe different things.I do not believe that when a financial institution lends credit that they have 100% of stock in reserve. I never said that financial institutions operate as full reserve banks :p Originally Posted by Firegoat7 In 1971 the US government no longer guaranteed Gold against the dollar. In effect, money became unsecured credit. Money is no longer created by governments printing against a guaranteed gold reserve. It is created by financial institution lending through debt. In 1997 a UK study estimated that over 97% of money had been created by debt, since only 3% of the currency physically existed in a printed form of notes and coins. Banks do not secure loans against cash reserves in stock. They secure against a promise to pay against a fraction of the cash stock. This is not necessarily a bad thing. As the demand for money goes up, surely some monetary growth is not a bad thing to stop deflation. Originally Posted by Firegoat7 If the promise to pay becomes worthless, like recent financial meltdowns in 2008, then financial institutions fail. That was a case of over-leveraging. Reserve requirements and generally leveraging opportunities are controlled by the Fed and the government- if set correctly they can be stable. The problem we saw is not inherent to fractional reserve banking. Originally Posted by Firegoat7 Credit cards force future generations to pay for economic growth. Inherently, no. Originally Posted by Firegoat7 The 15-20% interest that the financial institution charges must be paid back from the real economy. Since the interest charged creates money, it is only fair, in my opinion that a tax is paid to service the economic growth. Not sure where you are getting the 15-20% from. Are you talking about credit card debt? All people who use credit cards do not have credit card debt. Credit cards inherently only make transactions easier to do as there is less hassle than money. Taxing people in debt will only put them in more debt.

02-11-2012, 08:41 PM	#12 (permalink)
Firegoat7 Moderator Join Date: Sep 2007 Location: Getting owned by White in the Dragon and trying to recover lost positions from shock paralysis OTB Posts: 2,044 ICC Handle: guest	Originally Posted by Hayek Inherently, no. Let me get this straight. Credit debt creates money and you believe that it doesn't therefore create economic growth. I guess you are from the camp that asks people to offer opinions, but doesn't like to hear other peoples opinions if they disagree with your viewpoint. So be it, Do you even play chess? __________________ "...What I meant? Dear Mr Ian Rout (ACF news publisher) could you please put Ozchessforum in the next news letter! There is no reason to hide this forum from the Australian chess public. What they meant? Sorry, No english!- Amir Karibasic

02-12-2012, 08:21 AM	#13 (permalink)
Hayek Member Join Date: Apr 2010 Posts: 93	Originally Posted by Firegoat7 Credit debt creates money and you believe that it doesn't therefore create economic growth. I did not say any of that. First of all credit card debt does not create money. Second, I did not say anything about credit card debt and economic growth- there isn't necessarily any straightforward causal relationship there. Originally Posted by Firegoat7 I guess you are from the camp that asks people to offer opinions, but doesn't like to hear other peoples opinions if they disagree with your viewpoint. What are you talking about? When did I say that? You said credit card debt forces future generations to pay for credit card debt. I said that is no inherently true. What I said is FACT, not an opinion. Let me give you an example. I buy a $20 video game with my credit card. Come payment time I have no money, so I defer payment until the next month when with interest I have to pay $23. By then I save up $23 and pay it off that month. How did this force future generations to pay anything? All that aside, how are you claiming that credit card debt forces future generations to pay for economic growth? Economic growth is not the same as current spending.

02-12-2012, 09:49 AM	#14 (permalink)
Firegoat7 Moderator Join Date: Sep 2007 Location: Getting owned by White in the Dragon and trying to recover lost positions from shock paralysis OTB Posts: 2,044 ICC Handle: guest	Originally Posted by Hayek I did not say any of that. First of all credit card debt does not create money. Like I said before we believe entirely different things. Originally Posted by Hayek Second, I did not say anything about credit card debt and economic growth- there isn't necessarily any straightforward causal relationship there. You keep on claiming that debt doesn't create money. Originally Posted by Hayek What are you talking about? When did I say that? You said credit card debt forces future generations to pay for credit card debt. I said that is no inherently true. What I said is FACT, not an opinion. You are entitled to your opinion. I believe your opinion is not factual. Originally Posted by Hayek Let me give you an example. I buy a $20 video game with my credit card. Come payment time I have no money, so I defer payment until the next month when with interest I have to pay $23. By then I save up $23 and pay it off that month. How did this force future generations to pay anything? The party that collected the debt made $3. This is $3 that was not in the economy prior to the credit. Therefore the economy has grown by $3. Originally Posted by Hayek All that aside, how are you claiming that credit card debt forces future generations to pay for economic growth? Economic growth is not the same as current spending. The debt is paid in the future i.e not the past or present __________________ "...What I meant? Dear Mr Ian Rout (ACF news publisher) could you please put Ozchessforum in the next news letter! There is no reason to hide this forum from the Australian chess public. What they meant? Sorry, No english!- Amir Karibasic

02-12-2012, 10:19 AM	#15 (permalink)
Hayek Member Join Date: Apr 2010 Posts: 93	Lol, you can't say that matters of fact are subject to opinions. Whether or not credit card debt creates money is not a matter of opinion. Do you also want to argue that the fact "humans give birth to live young" is subject to opinion? Facts are facts. Originally Posted by Firegoat7 The party that collected the debt made $3. This is $3 that was not in the economy prior to the credit. Therefore the economy has grown by $3. No, because the person who paid the $23 did not pay $20 of real money and then just print the other $3. He just got $23 from someone else- it was not created. The way currency is created in modern economies is at the banking level through fractional reserve banking (loans created vs. reserves) and through central bank operations. Originally Posted by Firegoat7 The debt is paid in the future i.e not the past or present Okay, but in my example it is not future generations, just the future self of the same person. Which is why I said your original statement was not inherently true.

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