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RE: Fw: Goldman Sachs, Tobin Tax and the Flow of Funds.
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John Gelles
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Nov 01, 2009 05:49 PST
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Flow of funds for investment from one nation's markets to another's, for
altruistic development of global wealth for global problems and the
human race, or for selfish motives to enrich private parties or
predatory powers, is not a fundamental right of capital held by
corporations, property custodians or people in general. It is not a
human right.
Full employment is a collective human right.
===== the following quote is from "User Friendly Money", an e-book now
in progress =====
Monetary systems of production do need money enough for all who depend
on it for material need (because marginal farming is out of the question
and their "friendly money"'s purchasing power is certain--more certain,
in fact, than all other sound money's.)
Such plentiful money can mainly be left on deposit in a licensed bank.
To be fair to such depositors, who have refrained from spending while
inventories were produced and distributed, such balances on deposit must
be protected from inflation.
Over time, all people will soon have no consumer debt—and they will have
more money in the bank than they owe, for any reason.
Negative net worth will be as uncommon as it ought to be where people
prefer work to poverty--and all work generally makes sense.
Running a system on cash instead of debt makes sense--when stability is
the goal. The only reason to prefer debt to cash is the hope of
uncertain unearned reward: such casino systems belong in Los Vegas--not
in charge of defending liberty and civilization itself.
But it would be a goal of the reforms we propose to leave other desired
systems alone--to use their own rules (perhaps opposite our own)--to
illustrate, where possible, better reform than ours, and even no reform
at all.
===== end quote from "User Friendly Money", an e-book now in progress
=====
Contrast and compare views on casino capitalism and how to reform
economic practice worse than malaria or cancer in the long run--because
with the adoption of User Friendly Money the fight against nature's
diseases can be waged full time with a full cast of researchers, doctors
and wealthy patients rich enough to demand as much progress as is
possible.
http://www.ustaxreform.us/ufm1.htm
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Dear Ellen,
It is a noble campaign to try to cut Goldman down to size; and I wish
you good fortune.
I have never been enthusiastic about the Tobin tax.
In the end, it might do more damage to normal trade and real-investment
transactions across national frontiers than to hot-money speculators and
the like.
I'm not sure that the latter - the hot-money speculators - might not be
even more highly motivated by the volatility that might unexpectedly
accompany the tax. It is on volatility that the speculators live and of
course through which, unless they are quick on their feet, they die.
That is where massive damage has been done and may still be done by the
trillions of dollars of speculation that is still going on across the
foreign-currency exchanges.
What surprises me is that what I have called the "flow of funds" does
not get more attention from the relevant government, central-bank,
economists and private people around the world.
Some management of the flow of funds is essential domestically if we are
to avoid the bubbles with which we have been cursed in recent years.
Bubbles are not peculiar to the last few decades but the freedom and
technological ease with which funds can be tranferred or augmented for
speculative or in any event for less than real trade or long-term
purposes, have increased massively in recent years.
The way we have dealt with bubbles has been as unbelievably stupid as
much of the rest of our economic and financial policy. Greenspan I think
used to plead that it was hard to identify bubbles as they formed and
that excused him from doing anything. The only "solution" then became to
let the bubble or bubbles run their course and then self-destruct with a
great deal of pain for many people and for the economy as a whole.
An alternative was to raise interest rates sharply enough to burst what
has characteristically been an asset-price rather than a consumer-price
bubble.
That caused even more pain and misery, for example, in the housing
industry and for homeowners.
The only sensible way to deal with bubbles and associated issues is to
identify the excessive flow of funds into housing or mining or whatever
and take action to moderate or reverse the flow most likely through the
central bank and where possible - as we have discussed - with the aid of
a major publicly-owned bank.
We had such a system in Australia in the postwar years and it worked
well. As I said before it was in some ways like the "window of guidance"
of the Japanese and, like the Japanese, we were stupid enough to throw
away this valuable instrument of policy as the 1980s aged into the 1990s
and now we have, so far as I am aware, nothing effective at all.
The housing bubble of the early 1990s was a very nasty bubble indeed. We
should have learned from that but we didn't.
Now we've been bubbling again in Australia pretty much as other
countries have done and our whirlwind seems likely to be not far away.
On the international stage, we need somehow to revert to what the
original IMF Artcles of Agreement contemplated.
That was to have free convertibility of all IMF currencies for
current-account transactions. For capital transactions, continuing
controls were allowed although, I concede, most of the policy makers
then purported to look forward to free movement of capital as well as
current-account payments in the future.
Australia, as I recall, persisted with control of capital movements into
and out of the economy until the early or mid-eighties. Since then, I
think there have been no significant controls.
I would like to see us get back to some effective national and
multilateral controls on the flow of funds, not because I am in favour
of a tightly controlled system in general but because I think that some
effective management of the flow of funds internationally is just as
important as control of the flow of funds domestically if we are to have
national economies and the global economy stable, prosperous and growing
sustainably.
James
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