Quote Originally Posted by Seosaidh View Post
Interesting thread. I've been exploring this very subject lately, and have concluded the only purpose for taxation in a fiat money regime to to persuade people to use the currency.

Consider the fact that the US has $300,000,000 US Notes in circulation (probably locked up in a vault somewhere) that are backed by gold certificates. Yet everyone uses FRN's, because taxes are collected in FRN's, and loans are made with them.

Roosevelt began creating government programs that paid out benefits in FRN's. Now so many people collect government money in some fashion, it's unthinkable for most to consider ever going back to sound money.

It creates a demand for the notes produced. By habitation, it becomes customary and standard.