Yes, in dire straits. But it’s usually called ‘hyperinflation’ when you try to make seignorage equivalent to >10% of GDP and fund the government through deliberately creating high inflation (which is on top of any regular inflation, of course). And because inflation is about expectations in considerable part, you can’t stop it either. Not to mention what happens when you start hyperinflation.
(FWIW, this is a perfectly reasonable question to ask a LLM first. eg Gemini-2.5-pro will give you a thorough and sensible answer as to why this would be extraordinarily destructive and distortionary, and far worse than the estimated burden of tax return filing, and it would likely satisfy your curiosity on this thought-experiment with a much higher quality answer than anyone on LW2, including me, is ever likely to provide.)
Responding to your parenthetical, the downside of that approach is that the discussion would not be recorded for posterity!
Regarding the original question, I am curious if this could work for a country whose government spending was small enough, e.g. 2-3% of GDP. Maybe the most obvious issue is that no government would be disciplined enough to keep their spending at that level. But it does seem sort of elegant otherwise.
Yes, in dire straits. But it’s usually called ‘hyperinflation’ when you try to make seignorage equivalent to >10% of GDP and fund the government through deliberately creating high inflation (which is on top of any regular inflation, of course). And because inflation is about expectations in considerable part, you can’t stop it either. Not to mention what happens when you start hyperinflation.
(FWIW, this is a perfectly reasonable question to ask a LLM first. eg Gemini-2.5-pro will give you a thorough and sensible answer as to why this would be extraordinarily destructive and distortionary, and far worse than the estimated burden of tax return filing, and it would likely satisfy your curiosity on this thought-experiment with a much higher quality answer than anyone on LW2, including me, is ever likely to provide.)
Responding to your parenthetical, the downside of that approach is that the discussion would not be recorded for posterity!
Regarding the original question, I am curious if this could work for a country whose government spending was small enough, e.g. 2-3% of GDP. Maybe the most obvious issue is that no government would be disciplined enough to keep their spending at that level. But it does seem sort of elegant otherwise.