this post was submitted on 30 Dec 2025
34 points (97.2% liked)

No Stupid Questions

44977 readers
557 users here now

No such thing. Ask away!

!nostupidquestions is a community dedicated to being helpful and answering each others' questions on various topics.

The rules for posting and commenting, besides the rules defined here for lemmy.world, are as follows:

Rules (interactive)

Rule 1- All posts must be legitimate questions. All post titles must include a question.

All posts must be legitimate questions, and all post titles must include a question. Questions that are joke or trolling questions, memes, song lyrics as title, etc. are not allowed here. See Rule 6 for all exceptions.

Rule 2- Your question subject cannot be illegal or NSFW material.

Your question subject cannot be illegal or NSFW material. You will be warned first, banned second.

Rule 3- Do not seek mental, medical and professional help here.

Do not seek mental, medical and professional help here. Breaking this rule will not get you or your post removed, but it will put you at risk, and possibly in danger.

Rule 4- No self promotion or upvote-farming of any kind.

That's it.

Rule 5- No baiting or sealioning or promoting an agenda.

Questions which, instead of being of an innocuous nature, are specifically intended (based on reports and in the opinion of our crack moderation team) to bait users into ideological wars on charged political topics will be removed and the authors warned - or banned - depending on severity.

Rule 6- Regarding META posts and joke questions.

Provided it is about the community itself, you may post non-question posts using the [META] tag on your post title.

On fridays, you are allowed to post meme and troll questions, on the condition that it's in text format only, and conforms with our other rules. These posts MUST include the [NSQ Friday] tag in their title.

If you post a serious question on friday and are looking only for legitimate answers, then please include the [Serious] tag on your post. Irrelevant replies will then be removed by moderators.

Rule 7- You can't intentionally annoy, mock, or harass other members.

If you intentionally annoy, mock, harass, or discriminate against any individual member, you will be removed.

Likewise, if you are a member, sympathiser or a resemblant of a movement that is known to largely hate, mock, discriminate against, and/or want to take lives of a group of people, and you were provably vocal about your hate, then you will be banned on sight.

Rule 8- All comments should try to stay relevant to their parent content.

Rule 9- Reposts from other platforms are not allowed.

Let everyone have their own content.

Rule 10- Majority of bots aren't allowed to participate here. This includes using AI responses and summaries.

Credits

Our breathtaking icon was bestowed upon us by @Cevilia!

The greatest banner of all time: by @TheOneWithTheHair!

founded 2 years ago
MODERATORS
technopagan@lemmy.world
L3s@lemmy.world
jeffw@lemmy.world
L3s@hackingne.ws
L4s@lemmy.world
34
Where does the revenue gathered from taxes go and what is national debt? (lemmy.world)
submitted 9 hours ago by AfterNova@lemmy.world to c/nostupidquestions@lemmy.world
16 comments fedilink hide all child comments
top 16 comments
sorted by: hot top controversial new old
[–] FuglyDuck@lemmy.world 7 points 9 hours ago* (last edited 9 hours ago) (3 children)

In the US, at least, the government has 2 ways it can fund itself.

Taxes, which are collected through a variety of means- income tax, for example, or import taxes, etc. these funds go into the treasury, which then get doled out to pay for things.

If taxes are insufficient, or there's some type of emergency that requires an excess of funds more quickly than they can levy with taxes... the government takes on debt. Specifically, they use a number of different instruments including bonds.

The "national debt" is the the sum of all those bonds, loans and whosiwhats its that are taken out to pay for things. it's the debt that the national government owes to others.

[–] BlameThePeacock@lemmy.ca 7 points 7 hours ago (1 children)

You're mostly correct, but I would like to add a piece that not everyone understands.

The government issuing debt can be good for the government because of inflation and economic stimulus.

When the government sells debt, it sells $ in the future for a different (usually lower) price today. It doesn't actually pay interest, the effective interest is determined by how much the market is willing to pay for it.

Lets say the government sells a billion dollars worth of bonds, which will pay out in 20 years, they sell it today for three quarters of a billion dollars. Sounds like a bad deal, right? The government is clearly losing a quarter of a billion dollars.

Except, the government doesn't have to pay it back with money from today, it pays it back with taxes it will earn 20 years from now. If in those 20 years, inflation is say... 3% on average. Lets just ignore compounding to make it simpler, and say the costs of everything goes up by 60% over those 20 years. Assuming the tax rate stays the same (and ignoring compounding effects) they'd be collecting 60% more actual dollars than they would today. Paying back a billion dollars from taxes at that point is now easier than it would have been to try to raise 750 million from taxes today.

The government just "made" money by borrowing money. Really, it comes from inflation eating away at wealth, which is why the government printing debt like this usually causes inflation. All things inflating equally is a wealth tax.

Side note: The current inflation issues we're seeing are not happening equally; wages are not going up as fast as inflation on common necessities like housing and groceries. That's a different problem, not caused by government debt printing.

Then there's the economic effects of spending the money now. More economic activity today usually means more taxes collected overall throughout the years that whatever they spent the money on benefits people. A new bridge or road, better air traffic systems to allow more flights, safer oceans to protect shipping, etc.

[–] FuglyDuck@lemmy.world 1 points 3 hours ago

Not sure who downvoted you, lol. You're quite correct (I just didn't want to get into the weeds, heh.)

and yes. it's good to remember that not all debt is "bad" debt. Especially on a national level. I still think it'd be nice if they passed a balanced budget, though. (and one that covered everything that was important. like healthcare and housing and infrastructure and climate resiliency and stuff, and not bombs for genocidal maniacs)

[–] AfterNova@lemmy.world 4 points 9 hours ago (1 children)

Where do dollars come from? Is there any limit to how much money the government can create?

[–] FuglyDuck@lemmy.world 7 points 8 hours ago

cash is largely minted by the government, and they usually aim to maintain "enough" (currently 2.3k billion dollars currently?)

Most of the money supply is not in physical cash, though- they call that the m1 supply which is found in things like savings and checking accounts, other kinds of deposit accounts, etc.

Currency is added to the economy by buying back government securities (think bonds). Specifically this is the Federal Reserve. we also pay interest on money held at by the Fed. (Banks invest the money.)

[–] ryannathans@aussie.zone 4 points 9 hours ago* (last edited 9 hours ago) (2 children)

Why doesn't the US govt print USD to fund its deficit instead of borrowing?

[–] FuglyDuck@lemmy.world 9 points 8 hours ago (1 children)

Printing more money doesn’t make more value- it actually reduces the individual value of a dollar.

That value needs to come from somewhere.

When a currency is backed by some commodity (we backed by silver and gold, historically.) that value comes from whatever is backing it (ie you could go to a bank and get that stuff.)

Today, the dollar is backed by the confidence of the people using it. Specifically, the confidence in the US government. The value is also affected by supply and demand for that currency.

If the US suddenly decided to print the trillions dollar coin, the market reaction wouldn’t be all that hot. There is some wiggle room but generally not a lot.

If you want to know what happens when you push it too far, check out the Weimar Republic (Germany), Hungary after ww2 and Zimbabwe in the late 2000’s

It’s very much not-good.

[–] ryannathans@aussie.zone 0 points 4 hours ago (1 children)

80-90% of all USD that exists was printed during or after covid. I'm sure they can print gradually over time to cover excess budget deficit

[–] FuglyDuck@lemmy.world 0 points 3 hours ago* (last edited 2 hours ago) (1 children)

This is factually incorrect.

the M2 money supply expanded from 15 trillion to ~22 trillion from 2020 to feb. 2022 Then 1 trillion or so was removed by apr 2023.

You'll notice that inflation tacked that fairly closely. when there was an explosive growth of the m2, inflation was insanely high and then when some was removed, inflation began cooling off.

Also, Please go study some history.

This is what caused hyperinflation in the Wiemar Republic

This also caused hyperinflation in Hungary,

This is what triggered hyperinflation in Zimbabwe

In fact, there are many countries that have experienced hyperinflation, in which printing money is a common factor.

Is it possible that there's some wiggle room, where the effects won't be so bad? sure. Does that make it good economic policy? not really. COVID wasn't about perfect, or even good. If you're on fire, it's natural instinct to start patting the fire out with your hand. It burns your hand, and that's not good, but it's better than burning to death, right? Same concept.

[–] ryannathans@aussie.zone 1 points 2 hours ago* (last edited 2 hours ago) (1 children)

I was referring to M1 https://fred.stlouisfed.org/series/M1SL

It looks like they have since clarified that they changed the definition without making a new graph, obfuscating the data

[–] FuglyDuck@lemmy.world 0 points 2 hours ago* (last edited 2 hours ago) (1 children)

You're still wrong.

the M1 money supply is the vast majority of the m2 supply in 2020, it was 18 trillion and peaked at 21 trillion and then went down to 19.5 trillion. That's not "80-90%". That's 16.67%

And once again:

The increased money supply caused rampant and near catastrophic inflation that is the root of today's affordability crisis.

So do you get the point yet?

[–] ryannathans@aussie.zone 1 points 1 hour ago

The graph clearly goes from 4 trillion to over 20 trillion and I have already found why, clearly you didn't even click on it. That is 80%

[–] sin_free_for_00_days@sopuli.xyz 6 points 8 hours ago

The currency stabilised in early 1922, but then hyperinflation took off: the exchange value of the mark fell from 320 marks per dollar in mid 1922 to 7,400 marks per US dollar by December 1922. This hyperinflation continued into 1923, and by November 1923, one US dollar was worth 4,210,500,000,000 marks.

[–] workerONE@lemmy.world 6 points 6 hours ago* (last edited 6 hours ago)

Money collected from taxes is basically recorded in a ledger / account by the Treasury. Some people look at this as the end of the lifespan of that money or the destruction of that money.

Money begins its life by being spent by the federal government. They essentially create money with the press of a keystroke (granted they are spending funds which are approved by Congress and allocated for projects), the money credits a Treasury account, then they transfer it / spend it which puts the money into circulation.

The federal government does not actually NEED the money you pay in taxes to fund their spending. Money does not come from people. It is created solely by the treasury. The federal government WANTS the money from taxes to approximately match the amount they put into circulation through spending in order to prevent runaway inflation. If they spend more than they collect they are adding to the supply of money which seems to be normal for a society with a growing population and successful marketplaces, but if they spend too much you get inflation.

The federal government believes that balancing is important. They want the amount of goods and services that America exports globally to match the amount America imports. Each year there is a deficit which means that America receives more goods and services than it exports. In order to balance this, the Treasury issues bonds equaling the amount of the year's trade deficit. We don't have to do this but we choose to because we believe it will create financial stability.

When the US issues bonds it collects money and gives a promise to make interest payments and to repay those bonds when they are due. Those bonds are debt. This is essentially how the government borrows money.

This is a fantastic article from the Bank of England which is like the US Treasury https://share.google/GmWpluu76vSJpuw5C

[–] xylogx@lemmy.world 2 points 3 hours ago

Have a look at this site, there are some good visualizations: https://usafacts.org/government-spending/

[–] hera@feddit.uk 1 points 4 hours ago

When we get our annual tax summary in the UK they give us a summary of where tax was spent, this page explains how they calculate it and there is a table of where the money was spent 2023-2024: https://www.gov.uk/government/publications/how-public-spending-was-calculated-in-your-tax-summary/how-public-spending-was-calculated-in-your-tax-summary