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.