But it could be stopped literally overnight and the threat and the solution has been known for 80 years. This drop in the value of the pound cannot be related to economics as ALL the bad economic news is coming out of Europe .... Germany, France, Italy, Spain, Portugal and of course Greece. The good news as far as the economy is concerned, is coming from the UK.
If the problem and the solution is known why is nothing done to prevent speculators cashing in on a system that contributes nothing to any country’s economy or wealth creation? The only ones that benefit are speculators!
The speculators are now using the pound to buy shares ....... and as a result the Stock Market in London has reached around 7115 ....... as the pound drops the FTSE 100 rises! What goes up .... must come down?
Tobin's concept – from Wikipedia:
James Tobin's purpose in developing his idea of a currency transaction tax was to find a way to manage exchange-rate volatility. In his view, "currency exchanges transmit disturbances originating in international financial markets. National economies and national governments are not capable of adjusting to massive movements of funds across the foreign exchanges, without real hardship and without significant sacrifice of the objectives of national economic policy with respect to employment, output, and inflation."
Tobin saw two solutions to this issue. The first was to move "toward a common currency, common monetary and fiscal policy, and economic integration." The second was to move "toward greater financial segmentation between nations or currency areas, permitting their central banks and governments greater autonomy in policies tailored to their specific economic institutions and objectives."
Tobin's preferred solution was the former one but he did not see this as politically viable so he advocated for the latter approach: "I therefore regretfully recommend the second, and my proposal is to throw some sand in the wheels of our excessively efficient international money markets."
Tobin's method of "throwing sand in the wheels" was to suggest a tax on all spot conversions of one currency into another, proportional to the size of the transaction. In the development of his idea, Tobin was influenced by the earlier work of John Maynard Keynes on general financial transaction taxes.
Keynes' concept stems from 1936 when he proposed that a transaction tax should be levied on dealings on Wall Street, where he argued that excessive speculation by uninformed financial traders increased volatility. For Keynes (who was himself a speculator) the key issue was the proportion of 'speculators' in the market, and his concern that, if left unchecked, these types of players would become too dominant.
https://en.wikipedia.org/wiki/Tobin_tax
