Well done Ritchie!

Talking about a Tobin Tax, the Robin Hood Tax idea. Mr. Murphy says this:

I also believe in the two tier version – with rate hikes when volatility increases

Which is interesting really. Derivatives, one of those things to be taxed, lower volatility. So taxing them in order to reduce the trading of them, which is the aim of such a tax, would increase volatility and thus the rate at which the tax should be charged. Which will lead to less trading, more volatility and thus a yet higher tax rate.

Excellent, eh? We\’ve just introduced positive feedback into the financial system, positive feedback which would inevitably destroy it entirely.

5 thoughts on “Well done Ritchie!”

  1. Isn’t that what he wants?
    (Or says he wants – he doesn’t actually want to eke out a living in a cave having to fight and kill to defend what meagre scraps of food he can scavenge for following the collapse of civilisation as we know it)

  2. We’ve just introduced positive feedback into the financial system, positive feedback which would inevitably destroy it entirely.

    Shriek shriek! The sky will fall in! Oh dearie me, you couldn’t be exaggerating on purpose, could you?

  3. the other irony is that half of the proponents want a Tobin tax so it cuts activity and half of them want it as a source of free money for their grand projects. If the first are happy hte second will be furious and vicew versa. Either way, yet more intervention would be demanded, with various known and unknown consequences. Slippery slope.

  4. You really gave to wonder whether Murphy is being a contrarian out of sheer bloody-mindedness (and attention seeking) or whether he really believes all the shit he spouts.

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