Another Just Askin': Tax and Spend and Print

Look, I acknowledge that I am not an economist so I ask this more in the spirit of ingenuous curiosity than of intentional snark. The issue is: stimuli and printing money.

The standard mantra says that there are only two ways to run a deficit: tax and spend, or print money. Tax and spend is bad because it just sends money on a round trip to Washington with added freight charges. Printing money is bad because we will pay for it through inflation.

On the tax-and-spend point: this strikes me as a plausible half-truth. Taxing and spending may be effective if (big if) the recipient is more likely to spend it productively than the victim taxpayer. This sometimes happens: think dissolution of the monasteries. Indeed I suspect (though I do not know for sure) that it might be a good generalization to assert that confiscation of great estates usually enhances productivity.

On the inflation point, I feel shakier. But consider the example of supply side economics: isn't supply side based on the proposition that we can diddle our way to chastity--or at any rate, spend our way to solvency, i.e., cutting taxes without losing revenue? So far as I can tell, the empirical evidence in favor of supply-side is just about zero: actual sightings are less common than sightings of Elvis. Countless critics (including your humble servant) have written in derision of this particular fantasy.

But don't we have a somewhat similar problem with printing money? If we advocate printing money, don't we have to assume that we can accomplish what the supply siders have not, i.e., juice up the economy so much that it will compensate for the cost of inflation? If not, then we are back to issue #1--the efficacy of taxation. And the question would recur: is the recipient more likely to spend the money stimulatively than the one from whom it was taxed away? Except that in this latter case, I think I might know the answer, and that the answer might be "no." I.e., the standard learning is that inflation falls most severely on those on fixed incomes--pensioners and such--the most vulnerable and also the least able to protect themselves.

I hope I've made it clear that I'm not a doctrinaire Austrian here. But so much of the discussion among commentators on the left is just preaching to the choir--and on the right, just nonsense. I'd love to see a more measured response to issues like the ones I raise here.