The former governor of the Indian Central Bank is suggesting that the nation tax speculative and volatile capital flows:

India should tax foreign capital inflows into the equity market that stay invested for less than two years to protect its financial system and sustain economic growth, said former central bank governor Bimal Jalan.

“If you have unstable, unpredictable, volatile capital flows which are affecting financial stability as well as the real economy’s stability, then you have to find a way of handling them so that they are not free for all,” Jalan, who headed the Reserve Bank of India between 1997 and 2003, said in a telephone interview. “I’m in favor of tax on profits earned from capital flows which are going to the stock market.”

The problem is that this is a really nasty bit of musical chairs, and when the music stops, the IMF takes your house and children.

We should implement something similar in the US. It would also serve to shrink the financial sector, which would be a good thing.

Since it is a really good idea, it won’t be seriously considered here.