Comment: He did answer the question.

He said it is not theft because there is no promise on the face of the FRN that it will maintain its value. In other words caveat emptor notwithstanding we have no choice but to use the counterfeit notes issued by our central banks.

I have never heard this argument before so Krugman must have come up with it after some deep deliberation having been faced with the question several times.

It is however not true that there is no promise that the currency will maintain its value. That was indeed part of the original contract when there was still a link to gold and even now it is stated in the terms of the mandate the Fed has to maintain stable prices and low unemployment. Stable prices means maintenance of the purchasing power of the FRN to my way of thinking. Of course that is a patently ridiculous objective given the nature of the system and simply an indication of how much these people have lost touch with reality.