Re: Volatility and the market

[jackodonnell <jackodonnell@xxxxxxxx>]

Paul Davidson wrote:
>
> Trond and David's concerns has to do with volatility in financial markets.
> Trond's bond would not necessarily solve the problem.  There have been
> periods when price fluctuations in bond markets clearly were much larger
> than in equity markets-- e.g., during the early Volker years.
>
> The question is how to stabilize the movement of financial assets whether
> they be stocks, bonds, foreign exchange, etc.  (What Trond and David forget
> is that in an open economy even if you restrict the domestic price of
> securities to plus or minus 20 %, the exchange rate permits wider
> fluctations in the value of these stocks in terms of another currency.)

<<snip>>

Addressing the desirable goal of reducing "irrational exuberance" in
markets should not ignore the reality that there are occasional large
changes in value occurring over short periods of time that simply
reflect realistic changes in tastes and / or technological developments.
A progressive tax based on market valuations provides an impetus to
reduce the volatility of the exuberance of bubbles by reducing the value
itself as prices rise and reducing the loss of value as prices decline
while at the same time collecting the society's share of the value
created by its contribution of a viable market. I call the proposal a
"monopoly tax" and the details are available at:
http://www.geocities.com/CapitolHill/1067/c03r5a.html
--
			-- jbod

		Tax Privilege, Not People
___________________________________________________
Come visit and see a new economic perspective --
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           Comments/arguments welcome.
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