Tobin Tax. Anyone want to help me build the Tobin Tax website?

[niemivh]

If you want an exchange with a Tobin Tax, then create one. Everyone who thinks it's a good idea will trade on it. Others won't unless you force them to. We'll then let people figure out how valuable HFT is.

Ugh.  This isn't how laws work.  I'm not suggesting it nicely and asking 'pretty please'.  Government should, can and has been used to promote justice, equality and fairness.  But only if people care to use it to do so.  Trying to do everything outside of the system will result in failure.  Nobody here has given me any rational reason as to why HFT is a good or moral or productive or beneficial thing.  Therefore it should be stopped.  This attitude of "I'm taking my toys and going home" does nobody any good, including yourself.

[labestiol]

I'd love for someone to tell my why speculation is bad.

I sense a thread derail coming, but yeah I don't see why speculation is so bad.

Apparently that's because both of you aren't aware of how much of it is going on, at least I hope that is the answer.  Before I write a 10 page history on this I'll test the waters: do you think that there is any amount of speculation that would be 'too much' or is it fine to have 50 times GDP of a country flowing in and out of that countries capital markets annually?

No, I don't think there is the concept of "too much".  Maybe you can explain why.  Even just a short summary.

I don't know if the Tobin tax is a good idea but the problem it addresses is huge.

When you try to buy or sell securities, hypertrading is a way that allows the big players to find the maximum price you are willing to pay.  They do it by placing and cancelling sales 1000s of times per second when a new buy order appears.  The effect is that us peons always pay close to the max we are willing to pay while the Goldman Sachs type institutions pocket the difference between that max and the price the security could be acquired at.

Its thought that transaction tax to eliminate those trades would be helpful.  If it provided a buffer for the "too big to fail" banks, so much the better.

Personally I'd worry that the exchange would simply take place somewhere else.  I don't know if the tax would work.

So the problem is someone else makes money?  Oh noes, how horrible.  I pay what I am willing to pay, how horrible.

Problem is that someone else is making money off of you without you getting anything out of it.  You literally gain nothing in the transaction while they gain everything. 

The funny thing is you're already paying these inflated prices to private hedge funds and other HFT operations.  You get to pay more for hyper-traded funds while getting nothing (except for the privilege of paying a little more, I guess).  All the details of the existing system look like a tax (since you can't elect not to pay it) except you get nothing out of it.  Like I said before in an exchange where 1 party seeks to gain all the utility of the transaction without providing any benefit/utility to the other party seems like a parasitical operation that should be discouraged. 

 

I lose .00005%.  Oh no, how horrible.  I'll much rather pay a 1% tax instead to keep these bastards from taking my .000005%.

Sounds to me that someone is getting utility, otherwise they wouldn't be engaging in trade.

Do you have any source for the .00005% figure ??
Obviously the premium due to speculation (and especially HFT) is difficult to know. But i'll be ready to bet that it's far more than that (again, let's say on oil price). Pretty sure we can find lot of estimations.
Wanna bet that the average is > 1% ??

[niemivh]

I'd love for someone to tell my why speculation is bad.

I sense a thread derail coming, but yeah I don't see why speculation is so bad.

Apparently that's because both of you aren't aware of how much of it is going on, at least I hope that is the answer.  Before I write a 10 page history on this I'll test the waters: do you think that there is any amount of speculation that would be 'too much' or is it fine to have 50 times GDP of a country flowing in and out of that countries capital markets annually?

No, I don't think there is the concept of "too much".  Maybe you can explain why.  Even just a short summary.

I don't know if the Tobin tax is a good idea but the problem it addresses is huge.

When you try to buy or sell securities, hypertrading is a way that allows the big players to find the maximum price you are willing to pay.  They do it by placing and cancelling sales 1000s of times per second when a new buy order appears.  The effect is that us peons always pay close to the max we are willing to pay while the Goldman Sachs type institutions pocket the difference between that max and the price the security could be acquired at.

Its thought that transaction tax to eliminate those trades would be helpful.  If it provided a buffer for the "too big to fail" banks, so much the better.

Personally I'd worry that the exchange would simply take place somewhere else.  I don't know if the tax would work.

So the problem is someone else makes money?  Oh noes, how horrible.  I pay what I am willing to pay, how horrible.

Problem is that someone else is making money off of you without you getting anything out of it.  You literally gain nothing in the transaction while they gain everything. 

The funny thing is you're already paying these inflated prices to private hedge funds and other HFT operations.  You get to pay more for hyper-traded funds while getting nothing (except for the privilege of paying a little more, I guess).  All the details of the existing system look like a tax (since you can't elect not to pay it) except you get nothing out of it.  Like I said before in an exchange where 1 party seeks to gain all the utility of the transaction without providing any benefit/utility to the other party seems like a parasitical operation that should be discouraged. 

 

I lose .00005%.  Oh no, how horrible.  I'll much rather pay a 1% tax instead to keep these bastards from taking my .000005%.

Sounds to me that someone is getting utility, otherwise they wouldn't be engaging in trade.

Did you read any articles related to hyper trading?  Comments like this clearly illustrate that you didn't.  Please do so.  You'll benefit from the process.

The problem is that they are doing these 0.00005% profit trades every micro-second and using those trades and false bids, etc to manipulate the price.  Point being is that while their profit from each trade might be this low the total market manipulation is much greater.  Please research this more.  It's not some benign force mildly inconveniencing you it is a much greater problem than that.

[tomcollins]

Did you read any articles related to hyper trading?  Comments like this clearly illustrate that you didn't.  Please do so.  You'll benefit from the process.

The problem is that they are doing these 0.00005% profit trades every micro-second and using those trades and false bids, etc to manipulate the price.  Point being is that while their profit from each trade might be this low the total market manipulation is much greater.  Please research this more.  It's not some benign force mildly inconveniencing you it is a much greater problem than that.

I didn't see any links given.  I don't plan on reading anything long.  It should be simple enough to explain or give a short summary.

You use a lot of loaded terms-

Why do I care if someone is making a lot of small trades making a small amount of money?
Why do I care if someone makes false bids?  If the bid would be honored if someone gets their order in before it's canceled, it's not a false bid.

"Manipulating the price" - such a loaded term.  Again, don't care.  Someone foolish enough to be manipulated because someone puts bids in or buys and sells at different prices deserves any losses.  Moving money from idiots to non-idiots is good for society.

I'm not going to waste time researching something unless I have a good reason to.  Try to give it to me.  I'm willing to listen.  Why should I care someone is making lots of trades?

Until then- "Oh noes, someone be making profits by providing me liquidity!"

I refuse to take the word of someone who has the traitor Alexander Hamilton as their avatar.

[niemivh]

I refuse to take the word of someone who has the traitor Alexander Hamilton as their avatar.

-SOCRATES
Isn't the alternative left us to persuade you that you should let us go?

-POLEMARCHUS
Could you persuade us if we don't listen?

I'm apprehensive that you won't listen but just in case:

That shows how much you know about the history of the place you live.  I've seen all the Alex Jones, Zeitgeist, and other 'fringe' documentaries out there as well.  I do like Ron Paul.  If you have evidence that one the greatest founders of our country was a 'traitor' please post it here.

Is it that you equate the 1st bank (and therefore 2nd bank) of the United States as past incarnations of the Federal Reserve?  If so, please do more research on the topic.  I thought the same many years ago until I found out that while they are both central banks that is where the similarities end; and the reasons that you think the 1st bank was allowed to expire and the 2nd bank was 'slain' by Andrew Jackson are far from the reasons that you think they were.

[Sjalq]

The need for at least a 1% Tobin tax has long been overdue.  The amount of speculative money sloshing through the world markets is staggering and a speculative drain on the real economy.  In addition the advent of hyper-trading and flash-trading is another toxic poison to the real stock market of capital investors, entrepreneurs and businesses.  In addition, it is the most feasible way to shift the burden of closing the deficit from the backs of the pillaged and raped middle-class to the bailout taking parasites on Wall Street.

If you don't know about the Tobin Tax and how it could close the deficit and fix many problems of our existing system then please read up on it.

For those that have already done their homework and know the benefits that a Tobin tax would have please PM me.  I'm diving into doing more 'hard research' targeted specifically at this issue exclusively in order to build my website.

I need help: researching, making animated videos, website design, essay writing.

If you'd like to help please PM me and we can start a conversation.

Thanks.

 

Nowhere but on the bitcoin economics forum can a man so unexpectedly and unintentionally irk a bunch of Austrian economists!

The Tobin tax is a fabric glue seal on an old high pressure pipe. The pipe, its contents, the leak and the very purpose of the system need to be questioned before applying the "solution". The system of debt based money is flawed to its very core. Patchwork will do nothing but necessitate further patchwork in the future.

High volume trades are by no means bad. They act to provide price discovery as soon as possible. If you don't like what prices are telling you then there is a far deeper problem. It's like a man whose girlfriend wants to break up with him but he'd rather hear it tomorrow than today, so he prohibits her from talking! His solution does nothing but worsen his case.

It is the ability to create nearly infinite amounts of credit out of nothing that warp markets in the mid and long run, not "greed", "irrational exuberance" or "pessimism".

Hamilton might not be a "traitor" per se but he was not exactly for freedom and the little guy, he was for centralization and emperor like powers in the executive branch. Basically he was for everything (politically) that emperor Palpatine used to pull he's coup.

[tomcollins]

I refuse to take the word of someone who has the traitor Alexander Hamilton as their avatar.

-SOCRATES
Isn't the alternative left us to persuade you that you should let us go?

-POLEMARCHUS
Could you persuade us if we don't listen?

I'm apprehensive that you won't listen but just in case:

That shows how much you know about the history of the place you live.  I've seen all the Alex Jones, Zeitgeist, and other 'fringe' documentaries out there as well.  I do like Ron Paul.  If you have evidence that one the greatest founders of our country was a 'traitor' please post it here.

Is it that you equate the 1st bank (and therefore 2nd bank) of the United States as past incarnations of the Federal Reserve?  If so, please do more research on the topic.  I thought the same many years ago until I found out that while they are both central banks that is where the similarities end; and the reasons that you think the 1st bank was allowed to expire and the 2nd bank was 'slain' by Andrew Jackson are far from the reasons that you think they were.

http://en.wikipedia.org/wiki/First_Bank_of_the_United_States

If there's one person to go back in time to murder, it wouldn't be Hitler or Pol Pot, it would be Hamilton.

[naturallaw]

 Trying to do everything outside of the system will result in failure.

Why? Why can't you have the robots battle each other and have the "moral" people trade on their own exchange?

 Nobody here has given me any rational reason as to why HFT is a good or moral or productive or beneficial thing.  Therefore it should be stopped.

This is the type of prevailing attitude I hate about bureaucrats. It's not that there is anything morally righteous about HFT, although I do agree that it does help with liquidity, although I see you're point with orders that are placed and cancelled, never to be actually traded upon. These are the same justifications that bureaucrats use to outlaw things like drugs, violent video games, and could be used for things like luxury cars, yachts, etc.

[Sjalq]

If you want an exchange with a Tobin Tax, then create one. Everyone who thinks it's a good idea will trade on it. Others won't unless you force them to. We'll then let people figure out how valuable HFT is.

Ugh.  This isn't how laws work.  I'm not suggesting it nicely and asking 'pretty please'.  Government should, can and has been used to promote justice, equality and fairness.  But only if people care to use it to do so.  Trying to do everything outside of the system will result in failure.  Nobody here has given me any rational reason as to why HFT is a good or moral or productive or beneficial thing.  Therefore it should be stopped.  This attitude of "I'm taking my toys and going home" does nobody any good, including yourself.

Dude seriously pull a gun on us why don't you

[Sjalq]

If you want an exchange with a Tobin Tax, then create one. Everyone who thinks it's a good idea will trade on it. Others won't unless you force them to. We'll then let people figure out how valuable HFT is.

Ugh.  This isn't how laws work.  I'm not suggesting it nicely and asking 'pretty please'.  Government should, can and has been used to promote justice, equality and fairness.  But only if people care to use it to do so.  Trying to do everything outside of the system will result in failure.  Nobody here has given me any rational reason as to why HFT is a good or moral or productive or beneficial thing.  Therefore it should be stopped.  This attitude of "I'm taking my toys and going home" does nobody any good, including yourself.

Take your light weapon, strike him down!!

[niemivh]

 Trying to do everything outside of the system will result in failure.

Why? Why can't you have the robots battle each other and have the "moral" people trade on their own exchange?

 Nobody here has given me any rational reason as to why HFT is a good or moral or productive or beneficial thing.  Therefore it should be stopped.

This is the type of prevailing attitude I hate about bureaucrats. It's not that there is anything morally righteous about HFT, although I do agree that it does help with liquidity, although I see you're point with orders that are placed and cancelled, never to be actually traded upon. These are the same justifications that bureaucrats use to outlaw things like drugs, violent video games, and could be used for things like luxury cars, yachts, etc.

Everything you bring up involve two parties transacting with the knowledge of the other party and both parties benefiting from the transaction.  Once again, how does this compare to the HFT?  Nobody's been able to answer this question, they just pull a red herring out or straw man and start harping on something I never said or insinuated.

I guess such is the nature when the opposition realizes that they are losing the argument... I imagine that the ad-hominems are not far off.

[naturallaw]

Everything you bring up involve two parties transacting with the knowledge of the other party and both parties benefiting from the transaction.  Once again, how does this compare to the HFT?  Nobody's been able to answer this question, they just pull a red herring out or straw man and start harping on something I never said or insinuated.

If I put in a limit order to buy some sort of security and it gets fufilled by a HFT bot then I benefit by getting what I wanted. The HFT bot benefited assumingly by making a small profit. We both benefit. HFT is not a secret.  If I think a price is out of line with what I want to pay for something because of a HFT then I don't buy it. Again, there is nothing stopping anyone from creating a HFT-free exchange - unless there's a law against it. 

[Anonymous]

Everybody is not entitled to benefits from a transaction. Trading pokemon cards shouldn't constitute a contribution to "society".

[Sjalq]

I guess such is the nature when the opposition realizes that they are losing the argument... I imagine that the ad-hominems are not far off.

This unfortunately is the nature of debate. You have to resist the urge to simply call your opponent "irrational". If they are lashing out at you, remember you appear exactly the same to them. It really is somewhat disrespectful to blame the other person for not falling head over heals in love with your idea. If you really do wish to reach someone with something useful take them calmly through the logical steps while being yourself open to influence and possibly a whole different view of the subject. This is true even and especially the more irrational they appear.

[blogospheroid]

If you want an exchange with a Tobin Tax, then create one. Everyone who thinks it's a good idea will trade on it. Others won't unless you force them to. We'll then let people figure out how valuable HFT is.

Ugh.  This isn't how laws work.  I'm not suggesting it nicely and asking 'pretty please'.  Government should, can and has been used to promote justice, equality and fairness.  But only if people care to use it to do so.  Trying to do everything outside of the system will result in failure.  Nobody here has given me any rational reason as to why HFT is a good or moral or productive or beneficial thing.  Therefore it should be stopped.  This attitude of "I'm taking my toys and going home" does nobody any good, including yourself.

The way I look at it, natural law's point is a valid one. Go start your own bourse.

People cannot give a rational reason for every little perk in a corporate list of perks, but what they can ensure is that with a good possibility of takeovers, the perks remain at around the right level, neither too high nor too low. The way I look at it, if HFT is that harmful, then conservative business owners would float their shares in "slower" exchanges.

This is the bitcoin world. People don't complain. They compete.

[AyeYo]

Why not just straight up ban HFT?  

http://www.freakonomics.com/2011/03/28/should-high-frequency-trading-be-banned-one-nobel-winner-thinks-so/

Technically its difficult as it can move a lot of trade into the shadow banking system.  But retail investors are being gouged by the system right now so hopefully some way can be found to handle it, ideally in the exchanges themselves.

The thing to understand is that HFT is a forced, private tax by the parasites against the real economy.  By imposing a 1% tax on transactions legitimate business would be benefited as the HFT wouldn't be allowed to occur.  And if the HFT moved into the shadow banking system who would they be sucking off of?  They can't simply all suck off each other as HFT is reliant upon the real economy to provide its 'host capital'.  A shadow trading exchange without a Tobin Tax (after it was implemented) would be so filled with HFT that no legitimate trader would touch it.

I understand this 100%, but how are you figuring that a laughably small 1% tax (I'm assuming that'd be 2% round trip) is going to curb HFT?  2% knocked off of tens of billions of dollars still leaves them with tens of billions of dollars.  That's like shooting a firecracker at an aircraft carrier and expecting it to sink.

Yes, it'll most certainly pay for itself and generate revenue, there's no doubt about that.  I just don't see how it's going to even put a dent in HFT.  If we're really going to make an honest effort to stop HFT, rather than just share a tiny portion of the profits with the public, then let's try a little harder.  Why affect an across the board transaction tax at a fixed 1% when we could have no transaction tax for securties/currency held for more than say, one day, maybe a 2% round trip tax on securties held less than one day, a 5% tax on securities held less than one hour, and some very high, say 50%, on transactions that round trip in under 10 seconds.  These taxes could be round-trip fees and charged on the completion of the trade, just to keep things simple.

IMO, that would eliminate HFT or sharply curb it.  Due to this, it would probably generate less revenue than the Tobin Tax, but I don't think this should be about revenue, I think it should be about eliminating HFT.

They are using HFT to garner a tiny fraction of a percent of profit on the trade.  Each trade in a hyper-trading trade, yields a miniscule fraction of a percent in profit, point being much less than 1% that the tax would take on each transaction.  If you are going to make a trade that would yield you a 0.0034% profit and you're going to have to pay a 1% tax on that transaction it becomes obvious that only people making long term investments would be trading, which is what we want (if we want a functioning, productive economy).

That makes more sense.  I was assuming the 1% was taken off the profit from the trade, not the full value of the trade.

Since that's the case, this would absolutely demolish retail traders.  I'm fully against it.

[naturallaw]

I actually think this is a good idea, maybe I'm just too cynical, but this is what would happen in the real world if some government forced it upon all markets. The big HFT players would eventually get re-classified as a special type of market player with some government "license", let's call it "market maker trader" where they don't have to pay the tax. Now, suddenly they have an even more competitive advantage than that of what you claim them to have now. Now you really can't compete based on your own ability because you have to pay a lawyer to comply with the regulations to protect yourself from the hand of the state and then you have to pay some licensing fee, and now you can't even compete because you don't have enough capital for it to be profitable anymore. And we are back to square one, except that you can't create your own exchange that forces everyone to pay the "tax" because the government has forced upon you the rules they have set. So you couldn't even create an exchange that forces "market maker traders" to pay the tax.

[FredericBastiat]

If you'd like to discuss what the proper role of government and what laws are defined and to be used for, I'll post my definitions for review again.

I've spent the last year improving, defining, and refining how everyone could have the maximum amount of freedoms and liberties and the minimum amount of tyranny.

P.S. It wasn't as hard as I thought it would be.

My original post is here:

https://forum.bitcoin.org/index.php?topic=25184.msg329602#msg329602

[FredericBastiat]

Oh, and I forgot to mention one thing. The reason why me or anyone else should determine why we have laws and what and for who they should be for, is exactly so we can draw a simple line in the sand. The line in the sand merely determines if some force was unwillingly applied to another persons life or property in a unconsented to way. Nothing more, nothing less.

Discussing what is fair and not fair really is a subjective matter. Even manipulation, though not nice, does not, in and of itself, violate laws. It all depends on what your contract states.

Everything we engage another person in exchange for, is effectively a contract. If that contract, for example, states that you get to trade faster than the next guy, and there are no guarantees or warranties that explicitly state you are provided similar privilege (as per a contract), then you get to live with the fact you may not get your order executed in time.

I know that HFT seems sneaky and underhanded, but if you don't like it, don't engage in that trade system. Make your own. Of course, the second government comes in and creates special privileges, licenses, platforms, and other whatnot laws, then things have changed. Now the manipulation has become plunder. You no longer have a market of freely trading individuals. The manipulation has now become forceful. Now we have a real problem.

This is the problem we should all be trying to put down. Monopolies (of the forceful type) can now arise to put down any competition that would "right the ship" if left to their druthers. Your plucky laws have now come back to bite you. The very thing you felt was unfair, has now become unlawful. It no longer serves to protect life, liberty and property, but does the exact opposite. Your forced solidarity is now shackling what would be a free market.

You might then say that the laws were designed to prevent or reduce fraud. They do no such thing. We already have laws for fraud. They have been around for thousands of years and they aren't that hard to figure out. To wit they must merely show that what you agreed to (transfer of property, performance or any forbearances thereto) was not fulfilled.

Artificially manipulating a market to keep people "honest" only destroys a free market.

[niemivh]

Trading pokemon cards shouldn't constitute a contribution to "society".

Two people exchanging Pokeman cards are maximizing their utility, benefiting from the exchange.  This results in a betterment for society as 2 people gained something at the expense of nobody else.

Everybody is not entitled to benefits from a transaction. 

How you figure?  Can you give me an example of two people involved in a 'transaction' in which one (or more) parties do not benefit?  I think theft would be a good example, but can you think of anything else?