Frequently Asked Questions
Actually it is irresponsible for a government that creates its own currency not to spend more than it collects in taxes. By spending more than it collects in taxes the government provides the economy with a money supply that is created through public spending rather than private lending. This reduces the economy’s reliance on private borrowing and allows the government to better attend to public priorities.
No. The past several decades since the collapse of the gold standard in 1971 shows definitively that money need not be backed by gold in order to retain its ability to function as a medium of exchange, store of value, unit of account and means of settlement. The idea that money must be backed by gold is a relic of the gold standard era. It is key in order to take advantage of the opportunities presented by the post-gold standard era that we get beyond this kind of thinking.
Contrary to popular belief, money creation is not a rare occurrence that is hyperinflationary whenever it takes place. As we say elsewhere, money creation is as common as dirt, and is performed everyday by the government as well as by banks and other financial institutions. Irresponsible money creation however can be part of a dynamic that creates hyperinflation. Actual cases of hyperinflation are generally, if not always, the result of deeper political and economic crises.