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> The major innovation from feudalism is that now the peasants actually pay for the land up-front too, and they pay for any improvements on it, and then higher rent for the improved property

If the replacement cost of the home is $200,000 and the sales price is $500,000 due to land scarcity there is a rent or excess value of $300,000. The rent is paid to the seller through surplus asset gains due land price appreciation and to banks through surplus interest payments or usury due to the capitalization of ground rent in real estate asset price.

> Market forces create sustainable economies.

There is no free market for land and money, these are social factors of production recognized by the state to help independent agents coordinate production. When banks lend against the present value of future rents the borrower is pledging the surplus labor of future generations of residents as collateral. In the ancient era this resulted in people being sold into debt slavery, which is why religions sought to establish various rules concerning land reform and cancelling debts.

> an additional dollar in tax reduces the net asset value by the inverse of the tax rate (e.g. $1 in tax revenue at 1% => $100 value destroyed)

Direct taxes on land can actually help discourage freeholders from holding land off the market forever if it is properly assessed, which can reduce excessive capitalization of ground rent in asset prices and reduce the long term rent and debt burden.

Taxes on excess value and rents which are spent back into circulation on infrastructure can increase real capital values and wages.

This is a really bizarre take. No, the value of land and a home on it is just that - what people will pay for it.

“The borrower is pledging the surplus labor of future generations?”

Any books you recommend?

In my post, I explored the nature of ‘rents’ paid from property ‘owners’ to bond holders through property tax.

The ‘rents’ you are talking about are from land owners to future buyers. I am sympathetic to some of the ideas of the land tax, but the concept is rather antiquated for a number of reasons. Land is hardly a major category of economic value, and it confers no real power except scarcity and maybe thoroughfare if the right was absolute (it’s not). A land tax simply shifts the value extraction to bond holders, which is only possible using the government monopoly on legal force to extract payment. Bond purchasing power also directs the law itself (my claim is that this would be a good thing if it did not come with forceful value extraction).

More importantly, land tax puts no natural limits on the amount or value (or lack thereof) of spending. The biggest, most obvious problem, no matter which system of revenue is chosen, is wasteful spending. This can be tautologically defined as that which cannot be funded without use of coercion, deception, or violence. I posit that any system which relies on these, is fundamentally unstable, and ripe for exploitation.

> Land is hardly a major category of economic value

1. Real estate market is by far the largest market out there. 99% of people worldwide are involved in it with 10x leverage over their net worth or up to 50% of their paycheck.

Real estate is THE market where excess money ends up. It is the sink in the graph of money flows.

2. Real estate values are not created by buildings but by land values.

  - as brokers say, the value of property depends on 3 things: location, location, location
  - the actual price of buildings goes down to zero over a generation or so, or even below zero accounting for demolition costs for the next parcel tenant. See Japan
  - the inflation of real estate over last 2 decades has been 100s of percent, while inflation of labor has been at most in 1s or 10s of percent
  - a building can cost as much as 10x in a metropolis compared to the same building in a small town. Construction labor (imported from out of the country typically) and materials are extremely mobile, so the actual building doesn't explain the price difference. It is determined by land purely.

So no, land has always been and still is the largest market out there, the largest monopoly existing and the classical economists were right to include it as a factor of production alongside labor and capital, and modern neoclassical economics is completely wrong for ignoring the largest market in the world by a huge margin.

Sorry, I meant passive investment asset. You are correct in saying it is the primary economic value, but almost always active.

Government bonds are a special category though. They are the only asset other than gold certificates accepted by the federal reserve as collateral for issuance of legal tender.

This example is dumb. The problem you’re identifying isn’t with the bond issuance, it’s with the obvious municipal corruption you’re describing.

Corruption in government is indeed quite a hard problem, which exists in various corrosive amounts in different countries and societies. But it’s orthagonal to the basic concept of issuing bonds, except insofar as any pot of money anywhere in the private or public sector is at risk of being captured via principal/agent effects.

If you want to talk about corruption then talk about corruption directly. The solution to the above problem would be transparency of government actions, an independent press, and free and fair elections.

> The solution to the above problem would be transparency of government actions, an independent press, and free and fair elections.

Those all seem like very nebulous concepts that ring hollow under inspection. Force is much easier to understand and identify when it is being used.

And notice that my problem was not with bond issuance; it was with bonds secured by forceful seizure to pay them back.

You're arguing against a strawman.

Strong Town's "growth ponzi scheme" isn't about bonds (from my understanding).

It's referring to the practice of inheriting or overbuilding infrastructure, and then being unable to afford the maintenance costs of that infrastructure because the surrounding area isn't financially productive.

I understand. It wends a bit, but the point is that growth is required by the use of extractive funding mechanisms. They say maintenance costs are the root of the 'ponzi scheme', but I'm not quite buying that. Modern cities are funded by bonds, and the bonds are secured by taxes, and the taxes are secured by force. No, the bonds are not the problem. The problem is that the spending can only be sustained through increasing use of force on an increasing population.

Great post, thank you! and also - wow!