The Government's Best Friend of Taxation

A friend of mine published this really neat article in the American Economic Review. He was reinventing Ricardo's idea in a much less important context and didn't realize he was doing. His point is that what matters for your coin is not how much it weighs but how much it's worth. So if you tax the diamond production you produce less diamonds but they're worth more per carrot so no one is worth off and the government collects the tax. It suggests that the incentive for both fractional reserve banking and fiat money on quantum is very strong.