:The short answer is that governments have done this.  Done on a large scale it collapses the economy after runaway inflation.  On a smaller scale, it distorts economic planning, causes inflation, diminishes the value of the monetary unit, and finally results in recessions.  It also hides the effects of the 'taxation' making it seem like tax payers are getting a free ride when in fact the economy (all of us) will bear the burdens of higher inflation, periodic recessions, a less predictable economic future, and higher costs of everything. 

 :Here is the longer answer.  Money, like all other things, has a price (what the market thinks a dollar is worth).  And like all other things, that price is a product of supply and demand.  When the government prints money the money supply increases faster than an increase in the goods and services it can buy - this makes the value of the dollar (its price) decrease.  When it is seen that the government is printing money in great quantities, the market place uses other things to 'store value' - they invest in something that they expect to hold value (gold, real estate, etc.) and interest rates go up rapidly (people are expecting the money to be worth less when a loan is repaid).  Interest rates (the cost of money) become part of the price of all goods and services - it becomes more expensive to live and to do business.  The economy becomes shaky because there is uncertainty as to future prices which disrupts planning.  More mistakes are made by businesses and the amount of liquidating and laying off that is needed often result in recessions.  As government prints more and more money, people become less willing to accept it and use other monetary devices (e.g., foriegn currency) and this causes the value of the dollar to drop further.  It turns into a vicious downward spiral that can result in runaway inflation (Austria before the war, Argentina not that long ago).  A piece of paper has so little intrinsic worth that it counts on it's scarcity, authenticity, and a tradition of trustworthiness to hold a steady value, i.e., be a good 'money'.  Fiat printing of money is a form of theft - as is forgery.  It transfers value to the printer that is greater than those who will get stuck with the diminished value down the line.