I am a free market voluntarist, so the following thought in no way suggests that this theory would be moral or applicable in a free market society. So let's just hypothetically assume that it can be implemented using minimal force and it can function, let's analyze how it would theoretically work out.
My theory is about inflation and how inflation can be used to create an egalitarian society. My theory requires minimal use of force, and it's essentially pretty much libertarian, assuming that libertarians are minarchists. Let's see how it would be applied.
1. Nationalized Central Bank & Monetary Policy
The central bank would be nationalized and controlled by a separate state entity not part of the government (no more private shareholders), and the only power it would have is to print money and oversee/regulate the private banks. The national bank would no longer have the power to set interest rates, that would be set by the market.
The central bank would set the inflation rate to very low rates to sub 6% yearly, which would be tolerable, and would redistribute all that money equally into the accounts of every poor citizen. It will not lend to the government and it will not lend to the private banks, that would be forbidden. All it would do is to create sub 6% inflation yearly, and that is all it does.
Since inflation rate is very low so capital flight would not happen, and non-invested capital would be redistributed, slowly creating financial egalitarianism over long term.
2. Banking
Private banks would exist that would act as custodians of the money, without bail-in possibility. They would all have to keep 100% reserves, fractional reserve lending would be forbidden. All derivatives would be banned, since most of them are just scams and rely on fractional reserves anyway. Banking would only be lightly regulated to boost competition, with probably some blockchain technology to ensure transparency.
3. Taxes
Abolishment of all forms income taxes, and taxes on spending included but not limited to sales tax. This would help people spend easier and have a 60% higher life quality. The only taxes the government would levy would be static and not proportional to income or value of asset. This would be a little bit unfair to poor people, but they would get the subsidy from the central bank, so it would be no problem. And they can escape poverty much easier since the other taxes don't hold them down.
4. Regulation
Regulation is a business killer, and all businesses would only be lightly regulated via some blockchain to ensure transparency. The mafia style inspector shakedowns and the fine extortion racket would have to stop. Small businesses are constantly being harassed by inspectors, mafia style, and that is a huge problem that discourages small entrepreneurs.
5. Welfare & Pension & Insurance
Pensions would be private and optional, same way based on 100% reserves and auditable pension companies. Health insurance would be private since there is no need to nationalize it if people have enough money to buy the private one, which would either way go down in price after entrepreneurs innovate.
Welfare would all be abolished, since the central bank is already subsidizing poor people. The USA GDP is currently 18.55 trillion, if we introduce a 6% inflation rate and we have broadly 23% unemployment according to ShadowStats which would be 33 million people.
We then inflate 6% yearly of 1.1 trillion divided to 33 million unemployed people would equal to 33,727$ / each person yearly. That can easily help them get out of poverty, and if the GDP grows, which would obviously grow with no income tax, they would be far better off.
All other insurances would be private as well, there would be absolutely no reason to involve the government, and the amount of government overhead we would reduce, it would be a pretty libertarian society.
6. Government Funding
The only money the government would see is is what they would get from the static taxes, tariffs, custom duties or permits. They can of course issue bonds, but the central bank would be forbidden to buy it or lend money in any shape or form. Also the government cannot increase taxes and go indefinitely in debt via bond sales, they would have to seriously balance the budget.
All bond buyers would be foreign or domestic investors, therefore the government would actually have to be innovative in order to attract more investors. Nobody would invest in a corrupt government, nor in one that is running ponzi schemes. The government would have to become as transparent as possible.
This is my thought how a libertarian government would have to function to maximize social equality and liberty. It is true that I myself would prefer a no government, but if we could get down to this level, that would be tolerable.
Let me know in the comment section what you think about my theory!