This thesis explores the redistributive effects of monetary expansion and the political incentives that sustain its use. Despite the growth of welfare states and redistributive taxation, inequality has continued to rise across the developed world. While dominant explanations focus on structural features of capitalism, this study argues that expansionary monetary policy—primarily through seigniorage and debt issuance—plays a significant and underappreciated role. Using a fixed-effects panel regression on 38 countries over six decades, the study finds that international monetary expansion, particularly M1, is positively associated with future increases in income inequality. A comparative case study of U.S. war financing further revealsthat governments tend to rely more on monetary expansion (seigniorage and debt issuance) to fund their expenditures when public support is low, while resorting to direct taxation whenlegitimacy is high.

These findings suggest that the expansion of the money supply produces regressive effects on the income distribution and, at the same time, serves as a politically convenient tool for revenue extraction, allowing governments to exact the necessary resources from the population while obscuring the real cost of their expenditures. By drawing on theories of the Cantillon Effect, fiscal illusion, and predatory rule, the study raises broader questions about transparency,accountability, and fairness in public finance, and points toward the need to critically engage with potential institutional alternatives.