Private individuals and businesses must either sell something of value to acquire money or expend time and resources to mine it directly (think of gold mining in the case of a gold standard). Governments, in contrast, do not obtain payment for goods or services they produce; they generate revenues through the seizure of assets. In the past, they might have sent their agents to seize grains, cattle, coins, etc. from people. But in a monetary economy, they simply seize monetary assets, which is a lot easier to do.
Such seizure is commonly called taxation. This is often the main mechanism of revenue generation for governments.
To a lesser extent, governments engage in direct seizure of goods and services as well. Examples include seizure of land under eminent domain, quartering of troops in occupied lands, conscription, mandatory jury duty, forcing business to keep tax records and collect withholding taxes, etc. These also contribute to government revenues.
These two forms of revenue generation are quite transparent. Coercive, but apparent.
The third way, sometimes the largest way, in which they generate revenue is through counterfeiting of money, otherwise described as the expansion in the volume of monetary units, or inflation. This is a subtle form of seizure: through inflation (aka legalized counterfeiting), governments steal the citizens’ purchasing power. They use these ersatz monetary units to acquire the public’s resources.
Unlike monetary taxation and direct seizure, counterfeiting of money is less likely to generate public outrage due to its obscure nature.
Governments use these three forms of taxes to buy the goods and services they want, or pass on subsidies to various favored groups.
References
- Rothbard, Murray. What Has Government Done To Our Money? Chapter 2.