Talk about crazy taxes: There’s a tax on incomes that have not even had the chance to be generated.

Sir, I refer to Martin Wolf’s “How Reeves should fix the UK’s tax mess” FT November 5, 2025. It states: “The list of inconsistencies goes on and on. Nobody sens­ible would have designed such an absurdity”

Indeed! This year I asked ChatGPT: “Would it be completely wrong to opine that higher bank capital requirements against loans to small businesses and entrepreneurs, than against public debt, constitutes a tax on the access to bank credit paid by the first, and used by government bureaucrats?

ChatGPT answered: “Calling this a ‘tax’ on small business credit access is an analogy rather than a literal tax. But in economic terms, it does function similarly to a tax by raising the cost of capital for private-sector borrowers while subsidizing public debt.”

So, Sir, in effect, that so much ignored regulatory distortion “tax” is not even a tax on unearned income but, by often hindering small businesses and entrepreneurs the opportunity of a credit, or making these too expensive for them to earn an income, it is, de facto, a tax on the rebuilding of those fiscal cush­ions that Martin Wolf so rightly argue are needed.

@PerKurowski

https://subprimeregulations.blogspot.com/2025/02/ai-openai-chatgptcould-risk-weighted.html

Basel Committee’s bank regulations have empowered populist demagogues everywhere.

The world needs to understand how Basel Committee’s bank regulations have empowered populist demagogues of all shape, color or form, everywhere.

Sir, I refer to Martin Wolf’s “The hard task of exiting the populist trap” Financial Times, October 22, 2025.

Mr. Wolf writes: “We live in an age of populist dem­agogues. This is not a new phe­nomenon. Plato used the word “dem­agogue” in his cri­tique of democracy in The Repub­lic. He was cor­rect that demagogy is the Achilles heel of demo­cracy… How damaging is illus­trated by the fate of Argen­tina, a coun­try that has been plagued by populism since the rule of Hipólito Irigoyen in 1916.”

Sir, if the Basel Committee’s “We know enough about risks and so to make your banks safe, we give you our risk weighted bank capital/equity requirements”, is not a pure example of populist demagoguery, what is?

And with it, 1988, they de facto decreed that the populists/bureaucrats governing know better what to do with public debt, for which repayment they’re not personally responsible for, than the farmers, small businesses and entrepreneurs do with their bank loans.

Wouldn't Argentina’s Juan Domingo Peron have loved it? Of course, he would.

Sir, I ask, is that not a trap into which most of the world has fallen into? Anyone truly wanting to help Milei should look at it as a mutual problem and not one of which Argentina is supposed to climb out from on their own.

FT could be helpful if it begins to explain, without fear and without favour, how much Basel regulations distort the allocation of bank credit and with it, de facto, central banks’ monetary policies. 

Is it not a good time for that? Look at what is happening to all other economies, UK included. 

@PerKurowski