Also, bubbles involving debt create more damage when they burst, because people depend upon receiving the income stream from a debt and because of leverage. And he pointed out, as others have, the ease with which people could avoid leverage regulations by going offshare or using a different instrument that might e regulated differently.
On dailykos.com, I argued for a more extreme solution, outlaw the buying and selling of financial assets altogether. You buy it, you own it, you get the income stream, period! And here, I argue for a share economy, one invests in a real company or enterprise and gets a share of the income.
To be included a later Thoughtful Thursday:
- "Bubbles, Crashes and Endogenous Expectations in Experimental Spot Asset Markets", Vernon L. Smith, Gerry L. Suchanek, Arlington W. Williams, Econometrica Volume 56, Number Five, September 1988, 119-1151
- Vivian Lei, Charles N. Noussair, and Charles R. Plott, "Nonspeculative Bubbles in Experimental Asset Markets: Lack of Common Knowledge of Rationality vs. Actual Irrationality" Economitrica 69 Number 4 (July) 831 to 859 in 2001.
- Richard Thaler, "From Homo Economicus to Homo Sapiens" 2000 Journal fo Economic Perspectives 14 Number One (Winter) 133 to 141 (Overconfidence)
- Adrian Tobias, Arturo Estrella nd Hyun Song Shin, 2010 Monetary Cycles, Financial Cycles and the Business Cycle Federal Reserve Bank of New York Staff Reports 421.