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by meragrin_ 1368 days ago
The Federal Reserve can tax?
1 comments

Not directly as far as I know, but federal taxes are the other mechanism by which money can exit the economy. I should have stated as such.
How do taxes cause money to exit the economy? The government spends every cent it takes in from taxes (and some more): what happens is just redistribution.

So (e.g.) it takes taxes from overpaid SV software engineers and makes Social Security payments, buys missiles from Lockheed Martin, pays interest on debt, etc.

No; the Federal Reserve has essentially complete control over the monetary base.

> How do taxes cause money to exit the economy?

Less money is printed to cover the current budget.