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by Clarence Yu on April 13th, 2004

Clarence Yu

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Why does the government have to create money?

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  • by n_o_u_s on September 27th, 2005

    n_o_u_s

    To answer why, take this:
    "Governments haven't always created their own money: in the past, and in some poorer countries today, banks would issue private currencies, backed by their gold reserves. In modern countries, the government issues money, usually through a central bank, to be able to control inflation and interest rates."

    And add: the principle purpose of government is to protect its people from harm (foreign aggression, environmental effects, each other).

    That last part in the quote is pretty important in protecting the people in the modern world. Without the government's help, the economy would likely develop some very unhealthy aspects. Deregulation would probably either lead to a very unstable economy or some corporate entity assuming "control [of] inflation and interest rates." The other side of this is that it's a good way to control people, under the guise of guardianship.

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