Wall Street, the biggest free-loaders in the USA
FAQ
Question: Is there just a pile of money sitting there worth 4 Quadrillion (4,000,000,000,000,000)?
Answer: Firstly, money never sits unless removed from the system entirely by putting it in a safe or stuffing it under your mattress. For this reason it is important to look at money not as a stationary thing, but as a flow or movement throughout the system of the economy. To quote David Harvey from his book Enigma of Capital: “Capital is not a thing but a process in which money is perpetually sent in search of more money.” Wages, shown as a unit in this visualization are not really a unit; rather they are a flow of money to the employee from the employer. Wages are also not just said as a quantity but in a quantity times the rate at which they are acquired. Meaning, that if someone asked you how much you make and you responded “241” it would be an ambiguous statement until it was further qualified by saying at what frequency you made “241”. Per year? Per month? Per pay period? Per day? Per hour?
When those wages are spent, a part of that money spent goes to the wages of those employed of whom you spent the money with. When you deposit money in a bank it is likely that the managers of the banks investments buy some US Treasury Bonds with your deposits or invest or ‘invest’ it in the stock market, which would comprise that larger 4 quadrillion dollar sphere. Point being, is that none of these bubbles are sovereign from each other; not even from themselves – yet it is quite useful to look at these numbers this way. In physics, physicists frequently represent individual atoms as miniature planets with orbiting electrons, not because they ‘look’ this way, but because it is a useful and workable representation of reality. Economics is an open system, and abstractions such as these allow us to identify the aberrant nature of the almost incomprehensible levels of speculation going on in Wall Street. How and why is it that the level of ‘paper turnover’ exceeds the total output of the entire economy (GDP) by such a large order of magnitude? That, however, we’ll discuss in a later video release.
Question: Would a 1% tax on this 4 Quadrillion of turnover really gain $40 Trillion of revenue?
Answer: Revenue estimates with a FFT (Financial Transaction Tax) or Wall Street Sales Tax are hard to estimate. While a 1% tax would arithmetically equal $40 trillion of this larger pie it would also deter the vast amount of nano-short-term speculation which greatly distort the markets and create so much volatility. We will get to that in a later video.
Yet while, the amount of financial turnover is not a secret, it is harder to determine how much money that comprises the large orange 4 Quadrillion ‘pie’ is the same money circulating over and over again. Derivatives are not reportable, much of these trades happens off balance sheet (as in secret) and the banks don’t want you to know how much of these debt instruments they are spinning into reality. In addition to the fact that much of these trades aren’t even on exchanges, they are traded directly also known as Over The Counter (OTC). Determining these numbers wasn’t as easy as simply opening the Wall St. Journal to page 12, it was an investigative process. From this investigation we’ve gathered the following:
1. The total market capitalization of the entire global stock market is around $50 trillion dollars.
2. The total amount of derivatives (the primary cause of the financial crisis) outstanding in the major Wall St. ‘banks’ is around $1.5 Quadrillion dollars, that is almost half the orange pie in and of itself. Derivatives are something we hope to dedicate a larger video segment to in the future.
3. M3, an indicator of the money supply that used to be published by the Federal Reserve, ceased to be publically published in 2006 – this was an indicator that the present economic crisis would soon erupt to which this author was warning people about since 2006. This means we don’t know the total money supply in circulation. This throws another degree of uncertainty into the equation.
4. We know that estimates of a tax that Peter DeFazio and Tom Harkin are pushing for has revenue estimates of $150 billion a year, but it is very hard to estimate the exact amount that this tax would bring in, but from our calculations and with the right polices and rates, this tax could easily yield upwards of hundreds of billions per year. More on that in a later release.
5. The $40 trillion dollar illustration is shown to convey the absurdity inherent in our existing markets. That this untaxed flow is so massive (and destabilizing to the Real Economy) that even collecting 1% of it equals 275% of our GDP. If collecting, arithmetically, 1% of it equals almost three times our national GDP it is clear to see how the gyrations, tides and currents of a flow this large create so much volatility in the various financial markets.
Question: Where does the 4,000 Trillion dollar number come from? What are our sources?
Answer: Our sources are all major news outlets, policy groups and think tanks. Many of these cited sources do not include estimates of OTC (Over the Counter) trades, of which we’ve estimated the notative turnover of. One must remember that the majority of these trades are derivatives which are not reportable and largely a mystery – but, when light shines through and we get a peek behind the curtain of these major banks we see numbers in the Quadrillions, without fail.
http://money.cnn.com/2011/02/14/markets/nyse_banks/index.htm
http://online.wsj.com/article/SB10001424052748703471904576003400646739990.html#articleTabs%3Darticle
http://docs.google.com/viewer?a=v&q=cache:k2-bYSdnPwQJ:www.thecityuk.com/media/196632/derivatives%25202010.pdf+cbot+turnover+trillion&hl=en&gl=us&pid=bl&srcid=ADGEESiIyWgVUYG–U-KFUrg3_IurWqekDxS0gn1YdifUD4Lx6wfViV0a6dpsohWl89YrLpQ1zxAoXOLBqzotfyMjTHJ2gk3PIwNLV6OsbSMxpj9a6P9ArgCyf7bDa5fhk4dmw8NYw45&sig=AHIEtbTCVfJOyOJUiQG_ksCMc-W53p8b0w
http://bit.ly/hIKDQk
http://www.bis.org/press/p071210.htm
Question: Where did the list of supporters for a Financial Transaction Tax come from? Why does it say Financial Transaction Tax rather than Wall St. Sales Tax?
Answer: Any tax is comprised at its most fundamental level, two separate things: what is going to be taxed and where the tax revenue is going to go. This list is a list of people that all agree that the massive speculative-whirlpool-casino of international finance (namely Wall St. and the City of London) should be taxed. Where some of the people on this list and we here at Wall Street Sales Tax differ is where this money should go. Some think that this money should go to the IMF, UN or World Bank – we strongly disagree with this; what we are in favor of is a national tax on the finance sectors activities and paid to the US Treasury. The list itself is compiled from these sources:
http://ourfinancialsecurity.org/2011/10/afr-letter-support-financial-transaction-tax/
And the signers of the Robin Hood Tax.
http://robinhoodtax.org
New people and organizations are all uniting behind this idea, now including notables: California Democratic Party and Professor Cornell West. More are putting their support behind this literally every day.
Question: If we tax this money won’t it all just move offshore, for example to places like the Cayman Islands?
Answer: Did you know that everyone involved in the financial markets is already paying this tax? The difference is that they are not paying it to the US Treasury; they are paying it to the largest banks, hedge funds and other parasites on Wall Street. The methodology of how this is done is something that we’ll cover in a later release.
Therefore, but not exclusively, this is an empty threat that those profiting from and are empowered by the ‘casino economy’ certainly will make. It would appear to be a valid question at the surface of it, but one must understand that the type of trading that would be mostly impacted and curtailed IS NOT productive investment – it is a form of parasitism. How this precisely works is beyond the scope of this document. The reason why this threat works to scare would be regulators away is because people don’t understand the inherit absurdity of this question that I will seek to illustrate.
But first let us define some terms and get something clear.
A clarification of outdated terms:
‘Speculation’ has become so honed, so focused and so profitable with the advent of algorithmic trading, flash trading, hyper trading, etc. that combined with the massive amounts of financial deregulation the Masters of the Speculative Universe aren’t technically speculating, they have a fool-proof, guaranteed, near-zero-risk, method of extracting wealth from the rest of us. ‘Speculation’ implies a certain degree of ‘risk taking’ or ‘gambling’, this would be bad enough if this were the apex of the problem we faced personified in Wall St. – yet, the reality is much worse. The ‘speculation’ we are intending to illustrate is not the phenomenon of mal-investment, ‘animal spirits’, ‘irrational exuberance’ or herd behavior, those will be addressed in their own right. We are talking of a system in which The House always wins, and a few of these banks are effectively The House. It isn’t someone simply gambling with all our money (no Glass Steagall firewall), backstopped with ‘too big to fail’ (bailouts), and the subsidized credit from the 0% ‘loans’ from the ‘Federal’ Reserve, it is a financial weapon of algo-trading (not including the derivatives problem) that is destroying, through massive parasitism, our Real Economy.
We will call this wealth extraction method Arch-Speculation as it truly needs its own definition, separate from the more intentionally benign forms of speculation to which this tax would also curb the excesses of. How exactly this is done is something we will expose in later releases. It is too technical for a FAQ and requires its own video.
Those in the market for productive purposes, that is, fostering long-term economic growth, are not profiting from the speculative cyclone that is the present markets, in fact, they are, like the rest of us, having their wealth extracted from them and would actually benefit in real fiduciary terms, from a small tax on financial turnover. As Arch-Speculation isn’t concerned with growth, only fiduciary profits, of what consequence is it if they cease to steal our money through their methods that a transaction tax would stifle? I would think the less leeches, lampreys and ticks that are infecting and extracting our wealth the better. Hedge funds and other algo-trading firms are only able to make profit in doing their dirty deeds by feeding off a host-body; in this case the host-body is the rapidly declining Real Economy. What sense would it make for Goldman Sachs for example to set up an algo-trading operation on an exchange in the Cayman Islands? What productive activity would be going on in those exchanges that Goldman Sachs could suck the blood out of? Using parasitical methods requires a host-body – parasites cannot simply feed off of each other. The fact that what this tax effectively stops is parasitism will be made clearer in later video releases.
It is important to determine the speculative aspects of the market from the productive aspects – looking at a quantitative analysis: the minority of market activity (in terms of trades) actually has to do with market fundamentals (i.e. long term growth prospects). Hence, the $4,000 trillion swamp of financial turnover. The part of the markets that are fundamentally productive will not simply remain in the US once this tax is implemented, they will benefit from it. This too is something that we’ll explain in a later release.
In addition, there is something fundamentally ridiculous in the fact that an island nation of 50,000 people would be able to dictate to the great United States (with 300,000,000 people), our economic policy. If we wish to allow the Cayman Islands to threaten our economic security by helping our unpatriotic scoundrels in our country to violate our laws then the fact that we have the most powerful navy in the world comes to mind. Perhaps parking a destroyer or two off the coast of the Cayman Islands will let them see the light. This is what a real leader like Charles De Gaulle did when faced with the same problem of off shore tax havens. This is what JFK sought to do regarding tax havens before his untimely assassination.
Tax Havens are a problem in their own right that needs to be addressed, and we support the work of the folks over at http://www.tackletaxhavens.com/. Please visit their site for more details!
Question: How do we get something like a WSST (Wall Street Sales Tax) with a bought congress and a corrupt system?
Answer: “Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.”
― Margaret Mead
This can really be said of any existing problem that the status quo establishment and power interests are opposed to, but is that a reason not to try? We must cast off this generational learned helplessness if we are to survive the next century. If we have principles of positive action, constructive laws and solutions for society’s problems then that is something that a political platform can be built upon. With concrete demands we have a platform in which to litmus test candidates for office. Instead of being duped by simple slogans and smiling faces we will act on principles, and those opposed to our goals will be clearly known. Change in this fashion did not take long time; it isn’t an issue of time as much as it is of political will and organization. As quickly as a single election cycle we can radically change the political establishment. It is as simple as knowing where we want to go and having the strength, conviction and faith to see it through.
Question: Do these other countries really have a Financial Transaction Tax?
Answer: They do. But all financial transaction taxes are not created equal. The UK has only what is called a “Stamp Tax” which is one of the weaker forms of this tax. We propose stronger medicine than that; our specific policy write up will be posted at a later date. The list of these countries came from the following document: http://www.imf.org/external/pubs/ft/wp/2011/wp1154.pdf