A woman in the audience asks Krugman if government has some obligation to maintain stable price levels, and Krugman responds that government should manipulate the money supply as it sees fit, with no regard to the impact on those who hold the currency.
Why is he taken seriously by anyone? Why?!
A Euro note does not promise that it will have a fixed purchasing power. That was note the deal. […] So it’s not theft in any legal sense. - Paul Krugman
Maybe Krugman doesn’t see it as theft, but inflation is a hidden tax.
So many economists have said this. Hell, even Bernanke has.
how is inflation a hidden tax? explain please
So when you inflate currency, and your wages go up you still pay taxes.
However, when you adjust your wage increase into real terms, many people see that they made more money, in real numbers, before the inflation.
So, when you calculate in taxes, you are, in effect, paying more in taxes in real numbers than you did before.
I’ll put it numerically:
I make $15,000 a year. I pay 10% income tax. So in effect, I make $13,500 a year.
Inflation occurs and my wages increase to $18,000 a year. I still pay 10% income tax. After taxes, I make $16,200 a year.
However, due to the increase in food prices, gas prices, etc etc etc, I pay more, in real numbers for goods than I did at $13,500 a year. And, the government is taking more out of my paycheck than previously, but everything is more expensive.
So while the % income taxation hasn’t changed, due to increases in the price level, I have less money after-taxes to pay with.
Here’s Milton Friedman explaining it much better than I can using a family who experienced this “hidden tax” back in the 70s.