aspect of functional finance. The principles of funcional finance only specify when to use taxation, not what kind of taxation to sue. IAW functional finance, taxation should be targeted for maximum effect in withdrawing nongovernment NFA. It is well known that taxation is a disincentive and therefore when it is used this needs to be taken into account . In my view the way to target taxation is toward incentivizing growth, since taxation is only necessary when production is not able to meet demand, and growth based on production rather than financialization increases both supply and income from production. Rent-seeking is non-productive and parasitical on the productive economy, and so it should be disincentivized in order to increase productive growth. By disincentivizing rent-seeking through targeted taxation, productive investment is incentivized indirectly. In general, I do not favor taxing income, consumption, or production when there are alternatives that do not affect growth directly. Economic rent is a logical alternative. Peter D Reply: December 24th, 2010 at 3:23 am Warren: "in real terms people are working in the financial sector which has no value added to real output, rather than working in the real sector it's a massive brain drain and a total waste of human endeavor" Agree (and myself guilty as charged -- an engineer working in finance). Therefore while it does look like imports are always benefits and exports costs, it is not true if it means that all people who know how to make stuff are overseas while we