Krugman is a little upset with some of his commenter's insults.
Get your insults right. There is, I believe, a fair bit of evidence against the hypothesis that I’m stupid. What you mean to say is that I’m evil.
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.
Eric Falkenstein has a post up highlighting another area where there seems to be money on the sidewalk: Shorting the Vix. He notes that the VXX has underperformed a hypothetical outright short VIX position by a large margin due to the contango in the curve.
1. Scott Sumner Has an open letter to conservatives about monetary policy. A lot of it is pretty reasonable, but he makes the mistake of thinking that conservatives care about nominal GDP when in reality they care more about real GDP.
Mark Cuban has a blog post up where he shows that he thinks the government should encourage people to work at steady 250k a year jobs rather than getting a job in a potentially successful start up where they are often paid via high capital gains. He tries to justify this by calling it "earned money" vs. "found money" but his definition of "found money" sounds awfully similar to something that would impact early employees in a successful start up.
The disparity in wealth in this country does not come on the backs of people making 250k, or even 500k or 1mm per year FROM THEIR JOBS. The ever increasing delta between the rich and everyone else does not come from EARNED INCOME at all. It comes from found money.
Found money is when an internet bubble hits and the options you got for 1 dollar are sold for 250. It comes from buying a stock for $1 and seeing it turn into a “10 bagger”. It comes from hitting the lottery. It doesn’t matter whether you were smart or lucky, it is money you FOUND based on good fortune.
When I sold broadcast.com does anyone seriously think I would have cared if the tax on my FOUND money was 10pct or 20pct more ? Hell no. Would I have made any decisions differently, HELL NO.
For long term capital gains, it would be more difficult, but I would tax it at a gain greater than $1mm or a basis equal to the compounded CPI for every year held, against a 300pct increase and reduce the GOT LUCKY percentage to 20pct..