When James Tobin joined President John F. Kennedy’s administration in 1961, the U.S. economy was struggling to recover from its third recession in seven years. As a member of Kennedy’s Council of Economic Advisers, the Yale University professor put his theoretical research on asset markets to work in fashioning a novel strategy -- nicknamed Operation Twist -- to reduce long-term interest rates.
For two years, European leaders have sought to tax financial transactions as a two-fer: simultaneously to raise revenue and to tame speculative market behavior. French President Nicolas Sarkozy and German Chancellor Angela Merkel emerged from a meeting in Paris today backing the idea.
Following is the text of remarks made by Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System at the Federal Reserve Bank of Kansas City Economic Symposium in Jackson Hole, Wyoming.