Reply #23: Stupid, Stupid, Stupid

[tsipple]

A tax on long-term savings account deposits? There are an unbelievably large number of ways Americans could avoid that tax. One way would be simply to withdraw all their money and hang onto it in paper bills. The banks would love a run on deposits. Would do wonders for the banking system.

Or Americans could flee into Euros and Yen, depressing the U.S. Dollar precipitously (and dangerously).

Or they could "churn" between savings accounts at different institutions every five months, just moving deposits from bank to bank, with absolutely no productive impact.

Or Americans could move their dollar-denominated funds into any of several countries that have banks ready to accept deposits. The U.S. banking system would bleed money to, say, the Caymans. Suddenly millions of Americans would discover the joys of avoiding taxes, too.

What an idiotic idea. Can anyone help me understand any way that sort of tax would help?