[jefftk]

The idea is that the government prints money to cover expenses. If you could somehow force everyone to hold all their wealth in cash, this would act as a wealth tax.

This doesn't work, however, because with very high planned inflation no one wants to use your currency, and without taxation there's no reason they have to.

[rorykoehler]

They use your currency because they get paid in it. Government spending doesn't disappear into a black hole never to be seen again. [FALSE]>>> Also it's illegal to use other currencies as tender in (probably?) all countries in the world (Zimbabwe uses/used(?) the US dollar but I'm not aware of any other instances).

[pimterry]

> Also it's illegal to use other currencies as tender

That's generally not true - it's not the case in the US (https://mises.org/wire/use-us-dollars-mandatory-united-state...) or the EU (https://ec.europa.eu/info/business-economy-euro/euro-area/eu...).

It is impractical in most places of course, but only because there isn't much demand for it, so it's hard to get bank accounts, contracts or purchases denominated in foreign currencies. Companies and individuals are free to do so, but they don't because using the predominant local currency is useful and convenient for everybody (usually).

The places where using foreign tender is illegal or tightly controlled are generally places where they have huge problems with inflation of their primary currency, like Venezuela.

Venezuela is an illustrative example of the original point here: in practice, if you make your official currency very inconvenient/impractical/expensive, people _absolutely_ will switch to an alternative. Even though paying for things in dollars in Venezuela is illegal and awkward, everybody goes through convoluted mechanisms to do so anyway because the official alternative is worse.

[rorykoehler]

Thanks for the correction. I always assumed legal tender meant the other are illegal.

OT side note: if anyone from HN team is reading this it would be great if the upvote from the parent poster to a comment would be signified visually in some way (like green usernames for 2 week old accounts).

[wwtrv]

I’m not sure this true in most countries which don’t have strict capital controls. In most (all?) European (and I assume other developed countries) you’re free to use any currency you want as long as both parties agree on. iirc in the UK the pound is only legal tender when settling debts and merchants are not even legally required to accept payment in pounds and can demand any other currency they want.

[Lionga]

People of Venezuela would like to have a word with you

[TimPC]

Venezuela did a lot of things to restrict the use of the US dollar including forcibly converting all USD accounts at their banks to their own currency at an unfavourable ratio.

[rorykoehler]

They are doing it illegally. My point still stands.

[wwtrv]

Generally it’s only illegal in countries which have unstable currencies and strict capital controls.