The Grumpy Economist on Recent "Stock Gyrations"

While I've been inundated with interviews, blog posts, emails and tweets from various sources wanting to share their thoughts on recent public stock market volatility, there has been a dearth of quality insight. One of the main reasons for starting this blog is to highlight good articles that I want to share with my friends.

John Cochrane's recent blog post provides a thorough analysis of the multiple factor that go into asset pricing and his hypotheses for recent changes in the public stock market.  Warning, this is a long post with lots of charts and equations. 

Please use the comment section to share your thoughts or to highlight other articles that are related to this article.

Redistribution of wealth Through Time Travel

John Cochrane's recent blog post summarizes the Joint Committee on Taxation distributional analysis of the new tax law. As you can see from the JCT table below, and reading John's blog post, income categories are paying the same relative share of the overall tax bill as before the recent changes in the tax code.  While it is too early to tell how accurate the the JCT estimates will be, it is fair to say that the JCT is expecting less change than the mainstream media coverage would suggest. 

My biggest issue with the JCT report is the $260 billion decrease in total tax revenue collected estimate.  Since the federal government does not plan to reduce spending to offset the decrease in tax revenue, the tax bill will increase the federal deficit and debt. While countless politicians and talking heads argue whether benefits of tax code changes are being distributed fairly between income categories, there seems to be a dearth of discussion about the primary function of the tax code. This failure to fund the federal government's annual spending redistributes $260 billion from future taxpayers to current taxpayers.  This makes the changes between income categories seem trivial.