This paper applies the theory of optimal taxation to the study of fiscal and monetary policies in an economy without capital. The authors examine two closely related questions: formulating optimal fiscal and monetary policy using the Ramsey theory of optimal taxation and the time-consistency of optimal policies. In a barter economy, the main finding is that with sufficiently rich debt maturity structures, an optimal policy is time-consistent. In a monetary economy, optimal taxation must include an "inflation tax," and time-consistency does not hold. An optimal "inflation tax" requires commitment by "rules" that differ from ordinary excise taxes. The reason time-consistency fails in a monetary economy is that nominal assets should be taxed away via immediate inflation, a concept not present in the dynamic theory of ordinary excise taxes.This paper applies the theory of optimal taxation to the study of fiscal and monetary policies in an economy without capital. The authors examine two closely related questions: formulating optimal fiscal and monetary policy using the Ramsey theory of optimal taxation and the time-consistency of optimal policies. In a barter economy, the main finding is that with sufficiently rich debt maturity structures, an optimal policy is time-consistent. In a monetary economy, optimal taxation must include an "inflation tax," and time-consistency does not hold. An optimal "inflation tax" requires commitment by "rules" that differ from ordinary excise taxes. The reason time-consistency fails in a monetary economy is that nominal assets should be taxed away via immediate inflation, a concept not present in the dynamic theory of ordinary excise taxes.