thoughts on the world we are leaving to the future

[roverrescue]

I have been on annual leave which always gives one time to think outside the square.

A few threads on AULRO have got me pondering the big picture.
Initially the long thread debating the pros and cons of Australia's social welfare inefficiencies / cheating combined with experiencing some insights as to how lucky we are in Australia mixed in with a long running debate within my mind regarding the futility of an exponentially focussed economic system colliding with the reality of the fixed resource that is our speck of blue in the universe ...

So my theory and thoughts that are not in anyway unique have coalesced into the following. We the humans of the world need finances to afford a level of equality for humanity as well as to try to help preserve this planet for future generations. So what if my disdain for the economic system which truly pushes our system could also be its saviour?

Today, like each trading day of the year approximately five trillion US dollars will change hands on the foreign exchange market... That is quite a large amount...

Now obviously foreign exchange markets are important for trade and global stability however it doesn't take too much research to establish that the majority of fourex trading is purely for profit. Most of the trading is horse trading with no real capital injected to the real economy.

Sooooo if we need money for environmental causes or social welfare causes why cannot we as a society choose to "tax" a portion of the economy with largely no net economic productivity instead of taxing the economy that is productive ie increasing GST, business taxes , mining profit taxes etc etc.

Why is the financial funny money system not seen as a source of a solution??? Obviously the financial system rules our world but surely a 0.01% tax on fourex trades would generate a stupid amount of money to be used in the real economy. Obviously there would be huge campaigns against it with wailing and gnashing of teeth but once said and done the traders would not stop trading they would just be actually contributing to the economy in a real way. Hell they may even get a kick out of it !!!!

Anyway

Ramble over.

Thankyou for your time

Steve

[JDNSW]

Actually forex trading is only one such market, and it is difficult to see why that specifically should be taxed. Because it involves at least two countries, I suspect the mechanism for actually taxing it would be very difficult to set up - who is going to collect the tax, one or both of the two countries involved, the country where the trade takes place, the country of residence of the owners of the currency?

More generally, it seems to me that a very modest tax on all financial transactions could be useful - with no exemptions.

John

[Gerokent]

As a wise man (David Atten Brough) said;
"The only people who think money can save the planet are economists"


Or words to that effect

[DiscoMick]

Or, as an accountant once told me, accountants are great for telling you about what has already happened, but lousy at predicting the future.


Money markets are basically legalized gambling.

[roverrescue]

John.
I mentioned forex mostly as it represents very little if any true economic activity. Obviously taxing all financial transactions would also make sense.
With regards to the how... Well something like the interbank transaction transfer fees makes sense to me with a central clearing house holding the funds.

I dunno just makes more sense to me than taxing actual useful economic activity ???

S

[JDNSW]

.....
I dunno just makes more sense to me than taxing actual useful economic activity ???

S

Problem is, that while not an economic activity in itself, it is a facilitator of economic activity. Every overseas trade transaction necessarily involves a foreign exchange transaction. And having free international currency exchange has been shown by experience to facilitate economic activity better than fixed rates that may change at any time without warning or ratiuonal reason. Given free exchange, an active market ensures that the rates have some semblance of reality about them. Failing this you get the situation, for example on my first trip to Burma, the exchange rate was fixed at 6.35K/US$ - but you could get 35 in a back alley! And the currency could not be exchanged outside the country.

But the idea of a very small tax on transaction, as suggested, might put a slight dampener on the trade, and raise a lot of money in the process, but I don't see any possible mechanism for it ever happening - too many countries would have to agree to it.

John