Monday, March 28, 2016

Financial sector hypertrophy and financial transaction tax

The volume of financial transactions has stabilized since the Global Financial Crisis of 2008, but remans at very high levels, as shown in the figure below. With GDP at about 18 trillions the volume of financial transactions is about 25 times the size of GDP. The potential problems associated to a hypertrophied financial sector.

Yuge!

The source is this paper that discusses the possibilities of a financial transactions tax (FTT), something that has been proposed by Bernie Sanders. And as the authors note: "The revenue potential of a FTT stems from the enormous volume of nancial transactions, which have a value many times GDP."

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