[pdonis]

> Pension funds don't collect warehouses of cash, they invest in income-producing assets. Why does it matter if those assets are issued by Verizon, Alabama, Facebook or the Treasury?

Because Verizon and Facebook invest the cash they receive from sales of shares in assets that create wealth. (At least, we're assuming they do for this discussion; to they extent that they don't, they're not good investments, which is my point.)

To some extent the Alabama Port Authority is indeed similar to Verizon or Facebook, although I'd want to see their books to see how much was actually being used to create wealth. But the vast majority of the cash given to the US Treasury in exchange for T-bills goes to pay current expenses, not to create new wealth. It's as if you bought shares in Peter Thiel's latest startup and he used the money to buy groceries or pay his electric bill instead of building infrastructure for the startup.

I can anticipate one objection: surely Verizon and Facebook spend a lot of money on salaries and benefits, office supplies, etc.? Yes, they do; but if they're using cash from sales of shares to do that, they're in trouble. Cash for operating expenses should be coming from operating revenues, not from new investment; if new investment is being depended on to fund operating expenses, we call that a Ponzi scheme.