If I'm a typical American, and my federal tax rate is 22%, it doesn't matter if the value of the yuan is falling. That doesn't alter my tax bill.
Or: Let's say inflation is high, perhaps 10%, and I wind up owing Uncle Sam an additional $10,000 for tax year 2016. The federal government is (generally speaking) equally affected by the deterioration of purchasing power. In fact, the government gets hit by this, because if my taxes are based on income earned in a calendar year, and I have to pay them in April 15th and can even legally defer payment? Every day that I delay payment, the less the purchasing power of the $10,000 I owe.
Wrongmuch of our spending is accomplished by increasing the money supply
Also not happening, inflation has been very low for years nowwhich diminishes the buying power of money previously in circulation.
Mostly wrongthis is a hidden form of taxation, and especially harmful to people on fixed incomes.
1) It's only "taxation" if a government entity collects the funds (which, in your scenario, they don't)
2) Many Americans who are on "fixed incomes" are, in fact, on incomes indexed to inflation. E.g. Social Security and other benefits receive annual inflation adjustments. Investments tend to go up in nominal value when there's an inflation.
Now, it is true that people with savings accounts are getting railed when interest rates are low. But if that interest rate goes up, so does the cost of credit. Car loans, credit cards, mortgages (particularly anything adjustable), business loans all cost more. Economic activity will slow down as a result.
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The Crowd is not the sum of its parts.
does the dollar floating against another currency have the chance to effect your purchasing power?
hint - the answer to both is yes.
if you use the latter as a form of debasement of debt, it is most definitely acting in a similar capacity to a tax policy.