Central banks are tax collectors

The answer to this problem was given partially 200 years ago by David Ricardo. He demonstrated that there exists a superficial equivalence between taxation and borrowing in garnering funds for public expenditures. Many falsely claim that his proof was refuted by assailing the implications of his proof and conclusion; by arguing that a system of perpetual borrowing is unworkable and impractical, that deficits would soar to incomprehensible levels and never find favour with the public or public lenders. But one does not defeat a proof because one lacks the means to understand its full implications. Thus, Ricardo’s conclusion stands as solidly today as it did 200 years ago.

Ricardo was preaching a bit of magic. Government taxes are not uniform, higher interest charges are.

But the simple resolution is to examine how governments borrow lately. They do it with the help of a seigniorage gain from the central bank, otherwise known as a tax. So, today, we can see that Congress has elected to fund extra market borrowing with a highly regressive tax applied to the middle class via their bank accounts. And that is why we have antificants running around. They implicitly get the scam.

Note, the main discrepancy in Ricardo, the different methods of taxation, legislatures do not tax uniformly and that fouls his theory up, he is suffering flat earth syndrome. What we need is a general revision of economic theory to a theory built on value nets, and all this flat earth crap goes away, along with the useless proofs.