[marron]

If Krugman is right why are we paying taxes?

Exactly. If they are willing to do this, and they clearly are, then there is no reason to levy taxes. Print the money you need to operate government. The cost will be defused across the entire dollar-using world.

[CowboyJay]

"Exactly. If they are willing to do this, and they clearly are, then there is no reason to levy taxes. Print the money you need to operate government. The cost will be defused across the entire dollar-using world.

They levy taxes to manufacture demand for the FRN. It's part of how they keep the dollar positioned as 'the coin of the realm'. Taxes are paid in dollars, so people need to come up with dollars to pay them. Keeps them from wandering off the dollar plantation.