An alternative to popular faith
“By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, WASHINGTON – Treasury Secretary Timothy Geithner says the world’s major economies disagree over taxing banks to pay for future bailouts.”
Thank goodness this “one-size-fits-all” idea isn’t flying. The EU nations, which are not monetarily sovereign, use tax money to pay for bail outs. The monetarily sovereign nations — U.S., Canada, Australia, Japan, China, South Korea et al — do not use tax money, but rather pay for bailouts by creating money ad hoc.
A tax, specifically to pay for bailouts, may make sense for the EU, but not for the others. Of course, this all begs the question of whether banks should be bailed out, or whether bank creditors should be saved, while the banks are allowed to fail.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity