Thursday, July 15, 2010

Fiscal Localism and Inflation Taxes

Heard this on the way back from the pediatrician today...


(Link here for the script-impaired.)

One interesting part is how the published exchange rate for these local currencies is 1:1 with the Euro, but that they depreciate at a fixed rate. Then, you can purchase stamps from the local government to "re-charge" the value of the notes. This is quite literally an inflation tax, although it is somehow seen as a positive thing for the local residents because they can see and connect with the public goods and services those taxes purchase.

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