NationStates Jolt Archive

In this globalized era of highly advanced comunication technoligy humanity has found that everything moves fast, and changes occur suddenly. We find that in finacial sector changes can be a little to fast, and capital can move a little too fast. Sudden changes in exchange rate can be devistating for countries dependent on forighn trade as can change in intrest rates. Worst still finacial instabilty can travel from one country to another in a matter of days even hours.

So me and my associte repersentive of The People's Republic of Leninist Soviets, have decided to propose a reform bill to be taken to the U.N. My associate and I will wait till after some debate here, because if someone has something worth while to contribute or other wise sees that changes can be made we would llike to be able to make those changes before taking the bill to the U.N. With out futher ado here is the bill.

The Financial reform act.

Noticing that increasing capital mobility along with fractional banking (loaning more money than is stored in reserves) can cause financial instability.

Realizing that any kind of financial instability can travel from one country to another through drastic changes in exchange rates.

Recognizing that Countries undertaking financial reform risk capital outflow to a country that does not.

Proposes the following reforms be undertaken by the U.N.;

1. A 15% sales tax should be placed on individual financial transactions so speculators are encouraged to think about long term gains from an investment, and are discouraged from herd behavior (Tobin tax).
2. That all currencies be pegged to gold as to promote stability in exchange rates.
3. Fractional banking be made illegal and all money in any country should be nationalized (ie only governments can create money something banks regularly do in a sense when they loan more money than they have in reserves.). Countries that need to increase their money supply to keep their peg to gold are exempt but the banks in those countries must pay an income tax of to the U.N. 5% for all income earned by fractional banking.
4. That any income earned by the above taxes be used to purchases various currencies which can then be used to assist any nations with keeping their currency pegs.
5. The debt of all countries will be nationalized, (ie government will be allowed to barrow only from themselves and not banks, this can be done with the printing of money)

. This bill go into effect one year after it is passed as to give countries sufficient time to make the adjustments that required.

The Principality of Kingsey do not agree with sutch a proposition.

Fist of all we will not accept a proposition that will dictate our right to collect taxes or force Us to collect a tax.

Second the proposition to pegged our currency in gold will bankrupt our Economy.

And at last a year to emplement sutch a proposition is not enought.

The Principality of Kingsey do not agree with sutch a proposition.

Fist of all we will not accept a proposition that will dictate our right to collect taxes or force Us to collect a tax.

Second the proposition to pegged our currency in gold will bankrupt our Economy.

And at last a year to emplement sutch a proposition is not enought.

If a year is too short of a time period then we can easly make it longer. Would 5 years do?

The bill it's self has provistions to help you with the currency peg. Those taxes that the U.N. will collect are to be used for that purpose.

Unfortently totaly getting rid of the taxes is not possible for what needs to be done. Certian behaviors need to be discoraged and in the cases where the behavior is not disocoraged the U.N. is going to need reveniue to fix things. The U.N does not have the abilty to print money after all.

This is a terrible resolution.

Why base currencies on a rock?
And if you're going to do it, why base them on a rock that's so hard to find?

A 15% tax on currency transactions is way too much. 0.01% would be more than enough to discourage speculation. 15% would cripple international trade and spawn a huge black market.

Get someone who understands economics to help you with the proposal.

I'm pretty sure that the UN cannot tax nations for any reason whatsoever. It's game mechanics I think.

Knuckles Promised Land is not going to approve this issue due to its effect considered to be negative for countries paying attention to establishing good positive economy. Our country has been ranked 75135 out of 122004 for the speed of its economy development. This is too low, and you - want to place additional barriers for our country? You will not have our consent on this matter.

This is a terrible resolution.

Why base currencies on a rock?
And if you're going to do it, why base them on a rock that's so hard to find?

A 15% tax on currency transactions is way too much. 0.01% would be more than enough to discourage speculation. 15% would cripple international trade and spawn a huge black market.

Get someone who understands economics to help you with the proposal.

For those non economist out there our friend here is refering to a concept called "elasticity". Elasticty is the % change in the price of a product or service vs the % change in the willingness to sell or buy the product or service. In this case more to demand since we are talking about the purchase of stocks and bonds.

Things that humans "need" like food and medicine have a low elasticty. Like .2 or .1 meaning that for every 1% change in in price there is a .2 or .1 % change in the quanity demanded. Usless luxrey items like jewlery or mabye limo tend to have a high eleasty like 4 or 5.

Now let us assume elastity is high like... 10 that would mean that if our friend here put a tobin tax of .01% as he wants speculation would decrease by 10*.01%=.1%. A big number considerting billions of dollars can be moved in a day but hardly enouph to protect countries from exchange rate shocks. Lets make the elasticty ridculesly higher like...I don;t know...100. Well 100*.01%=1% I hardly think this is sufficent to stop all hered behavior.

Now I admit my tobin tax was a little high. I will lower it, but elasticty would have to be enourmous for even that to "Shut us out from" international trade.

Now the seconed question my fellow economist brought up. Why peg an exchange rate to a "rock"? I am not sure why a "rock" is so much worse than the paper that we acctully use as money. At any rate there are several anwsears to your friend's question...Because if a lot of countries peg their exchange rate to the same thing trade vollume will go up, because Gold is stable there for the currecny that is peged to it is stable, or mabye because people for what ever reason have decided that gold should be a substance that they should put their faith in (they must have for gold would be worthless with out their faith).

There are many reasons.

I'm pretty sure that the UN cannot tax nations for any reason whatsoever. It's game mechanics I think.

I don;t think it's game mechanics because they had to pass a resolution for that to happen, so i think this bill will render that null and void if this passes.

Knuckles Promised Land is not going to approve this issue due to its effect considered to be negative for countries paying attention to establishing good positive economy. Our country has been ranked 75135 out of 122004 for the speed of its economy development. This is too low, and you - want to place additional barriers for our country? You will not have our consent on this matter.

My friend...inot so hasty. If you want to devlop your economey this is the plan for you. In my economics classes we used computer models and found that in any economy with fixed exchange rates the slightist increase in consumption or government expediture can cause a country's economey to grow with unrelenting speed. All is we have to do is make sure people have faith in your country.

As for the tobin tax don;t worry too much about it. I plan to decrease it, and besides it is not so much a barrier as a filter that lets good speculation in and keeps the bad speculation out. Think about it my friend, because if this bill gets passed I promise you and your economey will not regret it.

oh by the way. I still have that computer model. If you want the model just ask. I can e-mail it to you.

As for the tobin tax don;t worry too much about it. I plan to decrease it, and besides it is not so much a barrier as a filter that lets good speculation in and keeps the bad speculation out. Think about it my friend, because if this bill gets passed I promise you and your economey will not regret it.


I think you will have to remove the tax completely. Under a resolution passed previously (#4 - UN Taxation Ban) the UN can not tax the people of UN Member Nations directly. It is illegal, and the proposal as such will be invalid and illegal as well.

As per UN rules and regulations, you must first repeal the taxation ban before you can submit this proposal. Attempting to repeal the taxation ban is folly, as too many nations are afraid of what would happen without it. Too many stupid proposal writers who think "Oh, I'll just impose a new tax". Pretty soon every nation is required to pay 37,700% tax. This resolution cannot work with tax.

My friend...inot so hasty. If you want to devlop your economey this is the plan for you. In my economics classes we used computer models and found that in any economy with fixed exchange rates the slightist increase in consumption or government expediture can cause a country's economey to grow with unrelenting speed. All is we have to do is make sure people have faith in your country.

As for the tobin tax don;t worry too much about it. I plan to decrease it, and besides it is not so much a barrier as a filter that lets good speculation in and keeps the bad speculation out. Think about it my friend, because if this bill gets passed I promise you and your economey will not regret it.

oh by the way. I still have that computer model. If you want the model just ask. I can e-mail it to you.

The proposed economy model is more like socialist. However, our country has an old tradition of capitalist economy model. We do not wish to leave what has already been achieved and we believe that socialist models due to their restrictions of the government, are not as efficient in this case as the free cash flow models. Therefore, the model you are proposing is simply unacceptable for us. Let it be that each country should choose their way of developing the economy. Perhaps you could try something similar in your region where all nations have quite similar views on that matter but do not push this ideology through the UN since too many countries will oppose you; and I believe that if this issue was enacted (which I doubt), many nations would be not happy with that, and that is not the way. Yes, we should try to cooperate but we should not presume on making the rest of the world have one particular faction's ideology.

I didn't understand the tax proposal to be collected by the NSUN. It would make much more sense for the nation whose currency is being purchased to collect the tax. Heh. Or maybe the nation whose currency is being sold.

0.01% would be more than enough to discourage speculation - speculators need extremely high leverage to operate.

The tax wouldn't be effective if it tried to only go after speculators; if it doesn't apply to every type of trade, swap, future, option, and forward, sneaky financial manipulators would find a way around it. Even a 0.1% tax would, in the real world, be crippling. "Legitimate" capital flows add up to billions or maybe trillions of dollars per day.

Yes, there would still be some form of international trade with a 0.1% tax, but it wouldn't resemble anything we have today.

We do not think one size fits all economics is a good idea.

You do not have our support.

Lady Desdemona of Merwell,
Senior UN representative,
The Black New World,
Delegate to The Order of The Valiant States

Absolutely against this proposal. You may not have a problem with social engineering, but in Adam Island we do. Just because you don't like a behavior doesn't give you the right to make it illegal.

I think you will have to remove the tax completely. Under a resolution passed previously (#4 - UN Taxation Ban) the UN can not tax the people of UN Member Nations directly. It is illegal, and the proposal as such will be invalid and illegal as well.


Realy?...so that means the U.N. has been spending money...but not earning any money in revenue....SWEET!!! Ok we can't have taxes but that's ok because there is more than one way to skin a cat. In my revised bill I have a nother method of discoraging hered behavior.

Realy?...so that means the U.N. has been spending money...but not earning any money in revenue....SWEET!!! Ok we can't have taxes but that's ok because there is more than one way to skin a cat. In my revised bill I have a nother method of discoraging hered behavior.

Actually there is nothing that says the UN can not collect from member nations, just the people of the member nations.

Anyway :}

As per UN rules and regulations, you must first repeal the taxation ban before you can submit this proposal. Attempting to repeal the taxation ban is folly, as too many nations are afraid of what would happen without it. Too many stupid proposal writers who think "Oh, I'll just impose a new tax". Pretty soon every nation is required to pay 37,700% tax. This resolution cannot work with tax.

don;t worrey. Everything is taken care of.

The proposed economy model is more like socialist. However, our country has an old tradition of capitalist economy model. We do not wish to leave what has already been achieved and we believe that socialist models due to their restrictions of the government, are not as efficient in this case as the free cash flow models. Therefore, the model you are proposing is simply unacceptable for us. Let it be that each country should choose their way of developing the economy. Perhaps you could try something similar in your region where all nations have quite similar views on that matter but do not push this ideology through the UN since too many countries will oppose you; and I believe that if this issue was enacted (which I doubt), many nations would be not happy with that, and that is not the way. Yes, we should try to cooperate but we should not presume on making the rest of the world have one particular faction's ideology.

This model can not be enacted alone or even by region. It would be like one night deciding to fight honarbley while surrounded by barbarins who chose stab him in the back. For this plan to work we must work together. But there is great reason belive that if we do work together we will achive enourmous levels of growth and stabilty.
Financial transaction will decrease to some extent, but the new found monetary stabilty will greatly increase trade of goods and services, and with the help of the U.N. the economies of the world including yours will find protection from both infaltion and unemployment.
This plan does not require that you conform to some socialist ideal. In real life even capitialistic conutries like Chilie (no Chilie is not a third world country, yes it is growing rapidly, and no it is not socialist) have capital controls. Oh by the way that remindes me. I tested your country in my model. I found did test your economey with free cash flows. Your economey faired well I must say, but only under the condition that speculators were loyal to you. As I will explain in just a moment. There is great reason to belive they may not be.

I didn't understand the tax proposal to be collected by the NSUN. It would make much more sense for the nation whose currency is being purchased to collect the tax. Heh. Or maybe the nation whose currency is being sold.

0.01% would be more than enough to discourage speculation - speculators need extremely high leverage to operate.

The tax wouldn't be effective if it tried to only go after speculators; if it doesn't apply to every type of trade, swap, future, option, and forward, sneaky financial manipulators would find a way around it. Even a 0.1% tax would, in the real world, be crippling. "Legitimate" capital flows add up to billions or maybe trillions of dollars per day.

Yes, there would still be some form of international trade with a 0.1% tax, but it wouldn't resemble anything we have today.

The tax idea is out the window however our discoustion isn't because there are other ways of stablizing finacial transactions most notabley reserve requirments. Now even though it is not possible to have a tobin tax per say having any kind of finical regualation can raise the cost of a transaction, which means I must ask an imperial question;

If there was a .1% tobin tax on all currency trades...how much would those currency trades decrease just in the U.S per day? Now you and I are both economist. And as econmist we do not just use words to describe the affect of an action. We use numbers. I sorrey but I need a number. words like "crippling" do not tell the enouph to an economist. If you can give me the right numbers I promise you your words will be gospal and I will throw hands down and say you were right, because if you do your math right then I am helpless agianst you. In the mean time however interaction between you and I should stop.

Oh just so you know....there is 2.5 trillion dollars worth of currency trades in the U.S. everyday.

We do not think one size fits all economics is a good idea.

You do not have our support.

Lady Desdemona of Merwell,
Senior UN representative,
The Black New World,
Delegate to The Order of The Valiant States

There is nothing more than I hate than confomrity, but when I know unusial actions cause somebody harm I have no choice. I will explain that in more detial.

My problems with this resolution is that it undermines a country's right to regulate trade within it's own borders, and the fact that many nations may not have enough gold to make up for all the cash they currently have out in the world. It would be devastating to their economy to recall that money, and it is doubtful that other nations would relinquish their surplus gold to other nations, being that the surplus gold give them an economic advantage. Also, these unfortunate nations would be subject to U.N. Punishments.

Also, the excessive tax rate is unnecessary, and could bankrupt or end the only chance for a decent economy in poorer nations.

Absolutely against this proposal. You may not have a problem with social engineering, but in Adam Island we do. Just because you don't like a behavior doesn't give you the right to make it illegal.

I have the right to make it illegal when people are hurt. If trillions of dollars suddenly leave a country, because of a rumor concerning that country's neghibors' trading partner i would think we as a people would have every right and reason to come to that country's aid. I want you to know that know that if you ever hurt for that reason I would come running to help your people, because I know they would lose their jobs and retirment for no fault of their own and no fault their goverment.

My problems with this resolution is that it undermines a country's right to regulate trade within it's own borders, and the fact that many nations may not have enough gold to make up for all the cash they currently have out in the world. It would be devastating to their economy to recall that money, and it is doubtful that other nations would relinquish their surplus gold to other nations, being that the surplus gold give them an economic advantage. Also, these unfortunate nations would be subject to U.N. Punishments.

Also, the excessive tax rate is unnecessary, and could bankrupt or end the only chance for a decent economy in poorer nations.

The tax thing out as it turns out the U.N. can supply as much revnue as it wants apprenlty gold or otherwise so that;s not a problem. The poor nations would benifit most form this bill because they are the most vulnarable to speculators.

As for nations regulating trade with in thier own borders....my friend...when it comes to finaces....there are no borders.

:) Yeah, I'm still trying to learn the whole economics thing, thanks for pointing that out. But I still don't get how poorer nations would benefit from this? If they don't have the gold, and the only way they can get it is from the U.N., where does the U.N. get this gold? Does it get it by donations, or taking it from other nations, or by mining? If by mining, then this poses some environmental problems.

As you can all probley tell by my detorating typing and editing, I am tired. Bringing about much needed reforms has never been easy and such is showing one me now.

At this point I wish I could just plan quit. I wish I could throw in the towel now, but I can;t because as it stand right now no nation is safe not even my own.

At any moment speculators can ravage the econmey of any country with the press of an entry key. In a day countries can lose enormous amounts of GDP through capital outflow, suffring from Unemployment, inflation, and on occation even civil disruption.

Sometimes this capital outflow occurs because for good reason. Sometimes a government is failing to provide a safe place for investment and speculators cannot be blamed for wanting to pull their money out of a country. But all too often a country is a harmed, because a country that is near them made bad choices, or even because of steroytiping.

We as nations need to protect ourselves, and we can;t not do it alone. Anyone nation who tries to defend themselves alone will themselves the fall because of the pressing of the "entry key".

My friends we are in a procarous postion and we need to defend ourselves as a team.

Now if you will excuse me it is very late where I am. I must go to bed. I hope to discuss this more tomarow.