Editing Seigniorage (section)

==Seigniorage as a tax==
Economists regard seigniorage as a form of '''inflation tax''', returning resources to the currency issuer. Issuing new currency, rather than collecting taxes paid with existing money, is considered a tax on holders of existing currency.<ref>{{cite book|url=https://books.google.com/books?id=HSVakrh8TToC&q=seigniorage+macroeconomics&pg=PA246|title=An Encyclopedia of Macroeconomics|first1=Brian|last1=Snowdon|first2=Howard R.|last2=Vane|date=11 April 2018|publisher=Edward Elgar|isbn=9781840643879|access-date=11 April 2018|via=Google Books}}</ref> [[monetary inflation|Inflation]] of the [[money supply]] causes a general rise in prices, due to the currency's reduced purchasing power.

This is a reason offered in support of [[free banking]], a [[gold standard|gold]] or [[silver standard]], or (at a minimum) the reduction of political control of central banks, which could then ensure currency stability by controlling monetary expansion (limiting inflation).  [[Hard money (policy)|Hard-money]] advocates argue that central banks have failed to attain a stable currency. [[orthodox economics|Orthodox economists]] counter that [[deflation]] is difficult to control once it sets in, and its effects are more damaging than modest, consistent inflation.

Banks (or governments) relying heavily on seigniorage and [[Fractional reserve banking|fractional reserve sources of revenue]] may find them counterproductive.<ref>Tara McIndoe-Calder, [https://www.academia.edu/595168/Hyperinflation_in_Zimbabwe_Money_Demand_Seigniorage_and_Aid_Shocks ''Hyperinflation in Zimbabwe: Money Demand, Seigniorage and Aid shocks''], [[Central Bank of Ireland]]; [[Trinity College Dublin]] - Institute for International Integration Studies, May 1, 2009</ref> [[Rational expectations]] of inflation take into account a bank's seigniorage strategy, and inflationary expectations can maintain high inflation. Instead of accruing seigniorage from [[fiat money]] and credit, most governments opt to raise revenue primarily through formal [[tax]]ation and other means