I've often wondered about that.... how real is this effect?  I agree that if the taxing authority doesn't have the ability to create more currency then taxation power is clearly important.   But if they can just print more anyway, then all taxation power gives them is the ability to target subsets of the population for confiscation rather than relying on inflation to take equally from everybody. 


Looked at another way, why should a government's taxation ability (which is a statement about its ability selectively to extract wealth from its population) allow us to say anything about the value of a particular currency?  The only link that I can see is that the government may demand that the value is transferred through the medium of their chosen currency, which would create demand for it at certain times.

Either way, I'm not sure the "taxation" argument is as strong as people seem to think.