"harmful high-frequency trading" rather than to inter-currency transactions, neither of Clinton's proposals could be considered a true Tobin tax though international exposure would be a factor in the "risk fee". Concepts and definitions Hedging vs. speculation Critics of all financial transaction taxes and currency transaction taxes emphasize the financial risk management difficulty of differentiating hedging from speculation, and the economic argument (attributed to the "Chicago School") that they cannot in principle be differentiated. However, advocates of such taxes considered these problems manageable, especially in context of broader financial transaction tax. Briefly, the differences are: hedging protects an existing investment against unforeseen price changes, while speculation takes on additional risk the investor could have avoided hedging is a means to manage or limit price risk, while speculation actually relies on taking a risk for profit (and is in this respect similar to gambling) hedging protects against price changes and makes them less relevant to the overall price of outputs sold to the public, while speculation incurs risk to make a profit specifically from price volatility hedging is a form of insurance for risk averse investors, speculation is for those seeking more rapid returns through higher risk Tobin's concept James Tobin's purpose in developing his idea of a currency transaction tax was to find a way to manage exchange-rate volatility. In his view, "currency exchanges transmit disturbances originating in international financial markets. National economies and national governments are not capable of adjusting to massive movements of funds across the foreign exchanges, without real hardship and without significant sacrifice of the objectives of national economic policy with respect to employment, output, and inflation." Tobin saw two solutions to this issue. The first was to move "toward a common currency, common monetary and fiscal policy, and economic integration." The second was to move "toward greater financial segmentation between nations or currency areas, permitting their central banks and governments greater autonomy in policies tailored to their specific economic institutions and objectives." Tobin's preferred solution was the former one but he did not see this as politically viable so he advocated for the latter approach: "I therefore regretfully recommend the second, and my proposal is to throw some sand in the wheels of our excessively efficient international money markets." Tobin's method of "throwing sand in the wheels" was to suggest a tax on all spot conversions of one currency into another, proportional to the size of