The argument against simply using the government's money issuing power to fund social insurance is that if the economy is in an inflationary environment, this injection of liquidity destabilizes the economy. So in line with the payments being made, which creates purchasing power, an equivalent amount of purchasing power should be destroyed via taxation.

The idea that the government has to "fund" spending of one class of its own "IOU"s by either demanding some of its IOUs back or by issuing a different class of its "IOU"s in order to bribe holders of large amounts of its IOUs to hand them over is a quaint holdover from previous economic systems.

There is, however, no reason for it to "fund" future entitlements in financial terms, because the constraint on whether it can meet future entitlements is not a financial constraint. If there is adequate productive capacity to provide the goods and services, at terms of transfer that the working generations of that day can live with in return for the promise that they will be taken care of when they retire in turn, there is no problem.

Buying private sector securities is simply a means of inflating the value of those securities and provide additional commission income to those in the financial sector. That funding can never actually be allowed to be drawn down, because then that would depress the value of private securities.

If the government wishes to hold a claim on the private income stream of corporations, there is no reason to engage in a transfer of value from the lower 80% to the top 20% to do so. Regressive income transfers increase economic volatility, increasing the size of both economic upturns and downturns, and both excesses cause economic damage.

All it has to do it to demand that all corporations engaging in interstate commerce hand over a proportion of their debt and equity instruments on issue. Since corporations cannot function without the special privilage of limited liability that they are granted by government, they are in effect a limited extension of the powers of government into the private realm, and there is no reason they should not be required to pay for the privilage.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.