Why do governments sometimes pay for their spending by printing more money ? Why do economists refer to this as an "inflation tax" that can result in very harmful results? Re: Topic 8 DQ 2 If the government has to increase their spending. sometimes they will resort to printing more money. This is because they have limited sources of borrowing or they have debts in which they need to pay . however they do not have the funds to do so . When money is printed this increases to number of the money supply in the economy. This leads to a raise in prices and this is referred to as inflation. Inflation can be extremely harmful to an economy because the values of the money decreases and its worth less in other countries around the world