News & Analysis
Disastrous Financial Transaction Tax Gains Traction
5 Reasons the World Is Catching on to the Financial Transaction Tax ... It has been more than 70 years since John Maynard Keynes wrote about the value of a financial transaction tax in "mitigating the predominance of speculation over enterprise in the United States." A financial transaction tax works by levying a miniscule fee on the estimated $2.9 trillion of daily financial activity through the trading of stocks, bonds, and derivatives in U.S. financial markets, based on our analysis. The tax makes some of the most speculative unproductive trading unprofitable, thus steadying markets and promoting real investment while raising much-needed revenues. Though many countries around the world already have a financial transaction tax in place, the United States does not yet levy such a fee on trading. – American Progress
Dominant Social Theme: Wall Street parasites are simply a blight; taxing them is good.
Free-Market Analysis: Like a bad penny, the "financial transaction tax" keeps turning up and if this article is accurate, the tax is gaining momentum around the world and will eventually penetrate the United States as well.
And that would be too bad. Wall Street is basically a creation of central banking – the Federal Reserve, in this case. Without monetary stimulation, Wall Street would not be what it is today. And thus the entire emphasis of this financial tax is likely incorrect.
Instead of removing the facilities of modern monopoly monetary stimulation, those behind the financial transaction obviously want to capitalize on it. Buy it's a bit like the government and smoking. Government bureaucrats don't REALLY want to get rid of smoking because it is a cash cow. So they only pretend to dislike the practice while expanding taxes and tariffs whenever they can.
The financial transaction tax, perversely, will put governments around the world into a similar posture. Bureaucrats will denounce "wasteful financial speculation" while working behind the scenes to facilitate it. A financial transaction tax will make changing the system in any meaningful way even more difficult – which is no doubt what its supporters really want. Here's more from the article:
While the idea of a modest financial transaction tax—or FTT, as it is often known—has been around for a long me, with budget balances and economic growth strained in the aftermath of the Great Recession policymakers around the world are taking a new look at the tax. Below are five reasons why the world is catching on to the financial transaction tax as a smart policy tool.
A financial transaction tax would bring in much-needed revenue The U.S. government is currently operating at its lowest level of revenues in more than 60 years. A 2010 report from the International Monetary Fund identifies the financial sector of the economy—particularly in the United States—as substantially undertaxed ...
Business and civic leaders support a financial transaction tax The idea of a financial transaction tax isn't new, but the chorus singing its praises is growing every day—from leading economists such as Nobel Prize winners Joseph Stiglitz and Paul Krugman to entrepreneurs such as Bill Gates and Marc Cuban, to financial leaders the likes of John Bogle, founder of the mutual-fund giant Vanguard Group. The financial transaction tax also has the support of unions for nurses and other health care professionals and service-sector workers ...
A financial transaction tax helps stabilize volatile financial markets An astounding share of transactions on financial markets today consists of high-frequency trades made on the millisecond by computers programmed with sophisticated algorithms. The computers make large-volume trades based on tiny changes in prices—fractions of a penny—and, in so doing, reap tremendous trading profits. While economic theory might suggest that this would lead to slightly more efficient financial markets, the Bank of England's Andrew Haldane has shown that "high-frequency trading appears to have amplified" the markets' erratic undulations ...
A financial transaction tax incentivizes investment for real growth The financial transaction tax by design increases transaction costs of financial trading, thereby encouraging investors to hold financial assets in their investment portfolios for longer periods ...
Many countries already have a financial transaction tax The standard stalling tactic for bringing a financial transaction tax to the United States is saying that we should wait until other countries do it first. But financial transaction taxes already operate in at least 23 countries around the world—including in international financial centers such as the United Kingdom, Switzerland, Hong Kong, and Japan—and that number is about to grow ...
Okay, let's comment on some of the highlights. First of all, the US government in particular doesn't need more revenue. Various US governmental entities already spend some US$3-4 trillion a year. This particular Leviathan should shrink rather than grow.
We don't see, either, how a financial transaction tax will stabilize volatile markets in a meaningful way. The problem with modern financial markets is that they are stimulated by a central banking boom/bust cycle. The best way to deal with the havoc caused by modern financial markets is to diminish irresponsible monopoly fiat money printing. As we've pointed out above, the financial transaction tax will actually – perversely – encourage and expand the current destructive system by giving governments more "skin in the game."
The article makes the argument as well that since because many other countries have adopted a financial transaction tax, the US should, too. But the US financial markets are the largest in the world and thus what is detrimental elsewhere shall be disastrous in the US. Foolish policies are not ameliorated by expanding them.
The biggest misunderstanding held by proponents of a financial transaction tax is that such a tax will somehow diminish Wall Street while supporting Main Street. In fact, this is a kind of middle-man prejudice. There is nothing wrong with speculation – theoretically, anyway: It has its place.
And as we often point out, because of fiat-money stimulation modern Main Street is just as distorted and unproductive as Wall Street itself. Promoting industrial distortions at the expense of speculative distortions doesn't improve the underlying economic situation a bit.
Bottom line: A financial transaction tax, like most government policies, will actually do the opposite of what it is meant to do. It will further solidify linkages between bureaucracy and modern central banking while providing Leviathan even more sources of revenue for additional forays into destructive regulation and enforcement thereof.
Once major Western countries adopt a financial transaction tax in force, the second part of this exercise will doubtless come into play – which is attempting to divert some of the funding stream to the United Nations.
Conclusion: World government will come another step closer with the increased penetration of this tax. It is being sold to people as a progressive measure that will damp bad business practices. But the solution in this case is more destructive to civil society than the problem.
Posted by mava on 03/01/13 09:28 AM
There you go, DB.
Check out your own rtisaploy and stevor. This is exactly what I mean when I say that the government is only a soldier of evil. The true evil that send the soldier is in the people themselves.
These two are pure evil. We don't even need to have a conspiracy in this case to see why there will never be any freedom as long as folks like these are around, and they always going to be, because these represent an absolute majority.
Posted by Abu Aardvark on 02/28/13 04:26 AM
turtle on 02/28/13 12:27 AM wrote: "Showing your true colours today, DB. We know who funds you"
Posted by turtle on 02/28/13 12:27 AM
Showing your true colours today, DB. We know who funds you.
So Goldman Sachs, JPMorgan, Credit Suisses(?... never!), Deutsche, Barclays etc. etc. etc. etc. aren't part of the problem ... this will at least make up for all the taxes they avoid thorugh the myriad of loopholes... so they pass them on to consumers... they already do anyway - but this will definitely reduce the number of thier own market transactions especially the HFT manipulative ones.
Your audacity is laughable.
Reply from The Daily Bell
Did you even read the article? Unlike the Soros-funded left, we understand the fundamental problem of the world is the financial system generally and fiat money on which it runs. Singling out Wall Street is part of a larger meme that seeks to avoid a conversation about money itself and the role that central banks play in the West's serial economic disasters. Your ignorance is either profound or deliberate.
Posted by laceja on 02/27/13 06:26 PM
rtisaploy, if it weren't for the Federal Reserve Bank, there wouldn't be any hedge funds.
Posted by rtisaploy on 02/27/13 05:56 PM
Webster Tarpley has been lobbying for the FTT for several years now.
I'd be in favor of a tax on all hedge fund transactions because these kind of transactions are doing a lot of damage to nations around the world.
Posted by stevor on 02/27/13 04:30 PM
Ask yourself. Was the stock exchange to be a place to INVEST in companies or like the race track where people bet against one another?
To me, it's like the race track, including that it's RIGGED with the "owners" of it manipulating it so they can STEAL from the peasants (as usual).
To make it a REAL investment tool, make there be a transaction tax that is very minor but if done thousands of times a day would amount to something substantial. If somebody actually bought stocks for INVESTMENT and held on to them for months or years, that fee would be very minor or the law could make it be zero after a period of time.
So, decide if you like the stock market to be pretty much like a race track with likely MAFIA manipulation or a place to INVEST for one's future!
Posted by 1776 on 02/27/13 12:40 PM
Jan. 17 (Bloomberg) -- In today's "Single Best Chart," Bloomberg's Scarlet Fu displays how inflation has increased in the 100 years since the creation of the Federal Reserve. She speaks on Bloomberg Television's "Bloomberg Surveillance."
Click to view link
Counterfeit money is imitation currency produced without the legal sanction of the state or government.
Producing or using counterfeit money is a form of fraud or forgery. Counterfeiting is almost as old as money itself. Plated copies (known as Fourrées) have been found of Lydian coins which are though to be among the first western coins. Before the introduction of paper money, the most prevalent method of counterfeiting involved mixing base metals with pure gold or silver. A form of counterfeiting is the production of documents by legitimate printers in response to fraudulent instructions.
This is QE!
Posted by 1776 on 02/27/13 12:26 PM
Rockefeller Global Tentacles Exposed in 1959 by the Soviet Union Wayne MADSEN 15.09.2012
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Posted by mava on 02/27/13 09:41 AM
Taxation being violence, this tax, like any other tax, can not have any other effect, but the negative one. People, on the other hand, being dumb and vicious creatures, I have no doubt that this tax will be instituted.
People think that speculation is somehow bad. They think taxing someone violently is better than what they perceive that somebody does to them by their own free will.
Here is an example of a cost that stops free-riding problem: Make all post boxes private and enable the owners to charge whatever he may desire for accepting mail. (the same solution will work for e-mail junk too). To mail something to you, I will have to pay you, say 10c. This will destroy junk mailers.
Will this be ever done? Nope. Why? Because this is non-violent and will work, and will not make people poorer. This is why you will not see this anytime soon. The people themselves, being hellbent of self-destruction and violence, will vote against this.
They will say:
"What? I won't vote for something that would solve the problem! Hell no! Especially if the measure hurts no one! Especially, if the government doesn't get richer from it. And of course, I can't see how I, myself, am ever going to get hurt by this! So, no way!"