Some thoughts on POMO and offshore banking

Watching governments put pressure on those who escape taxes through offshore tax havens, it seems to me that the target of future liquidity and tax revenues is being announced. 30 trillion USD in the Bahamas is a lot of money. All this money was taken from active circulation and put in banks, who presumably invest in bonds.

As Mr. Jensen said to Howard Beale about dollars and currency flows in the classic film, Network,  “the Arabs have taken billions of dollars out of this country; now they must put it back.” The point made is that global currency really runs the world. POMO seems like a rational policy when money has been illegally or legally exported.

The ultra-wealthy in safe havens fear government insolvency and inflation. The fear of insolvency finds political expression in the discourse of austerity. The fear of inflation finds expression in criticism of POMO. (Oh yes, and fear of the Obama government and its capacity to squeeze the wealthy back into some kind of social compliance finds the most wild expressions in American politics).  To sum up, POMO has definite effects, and traders must attend to them. However, most political/economic discussion carried on by traders and their media, such as CNBC, reveal either stunning complicity or utter naivete of the real stakes and players in global exchange.

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