Tuesday, January 15, 2008

Tax the bank-baskets on the number of eggs they carry!

To tweak and refine the current bank regulatory systems, for instance by further professionalizing the credit rating agencies, in order to get us to foolishly trust them even more, will just increase the systemic risks of a global failure.

The best and safest way is to follow the prudent tradition of not putting all your eggs in the same basket and to that effect create a progressive tax on the size of the banks. The larger the bank, the more it will hurt if it fails, so the more it should have to pay in insurance premiums.

Marx prophesied “a progressive diminution in the number of the capitalist magnates” and the best way I know of fighting Marxism is to stop this prophecy from becoming a reality.