by Higgenbotham » Sat Oct 03, 2026 2:16 pm
This is the Archdruid's response to a question.
“To say that the economic empire of hallucinated wealth will continue to exist, though, does not imply that it will continue to produce the goods and services and provide the jobs that people need.”
How far do you think things can go before the money economy outright collapses? Even with all the gimmicks and financial sorcery, surely it must be hit with reality eventually, right? Or perhaps it can sustain itself indefinitely as the real economy withers until political upheaval arises to destroy it?
Nephite, the money economy can outlast nearly all of the real economy. It’s quite possible that the stock market will hit all time highs on the day that the power goes out in Manhattan forever and armed raiders cross the George Washington Bridge in search of loot and slaughter.
https://ecosophia.net/economics-halluci ... revisited/
This is sentiment, which is based on imagination. The only basis it has in reality is the rear view mirror which is always what creates the conditions for positive imagination-based sentiment. That being sentiment is most positive at tops and sometimes bottoms. At the gold bottom in 2001, people imagined gold would be mined from sea water for about $10 per ounce. Forget about doing the calculations based on real world constraints.
Circling back to what Hugo Salinas Price said about imagination vs reality, it's possible for imagination to break from reality for a time or, in this case, for a long time. But stock markets do have to have a basis in reality with respect to earnings (and their growth) and interest rates.
Earnings have to come from somewhere. They can be counterfeited for a time and they were. That game is pretty much over (see next paragraph). The last gasps are things like the $1,000 Trump Accounts which probably have to be invested into stocks, the purpose of which would be to keep the bubble moving until midterms, I suppose. They can be stolen from the private market for a time and they still are, but that game is winding down because stolen money must have a source from the real economy which eventually becomes a destitute real economy the more that gets stolen out of it. They can be faked for a time and they still are. But the Enrons and WorldComs of the world always get exposed by somebody and that reality based fact hasn't changed either. There are multitudinous discussions occurring right now about OpenAI being a fraud. If the stock market drops due to an interest rate rise or some other reason those discussions will probably gather momentum.
If the 10 year breaks higher to 6 percent and more, no, the stock market will not grow to the sky no matter how much that may be ingrained in someone's imagination. I'm not saying the 10 year will do that, just that interest rates form a basis of reality for what the stock market can do and, obviously the Fed can't hold interest rates down forever without popping the inflation genie out of the bottle.
This is the Archdruid's response to a question.
[quote]“To say that the economic empire of hallucinated wealth will continue to exist, though, does not imply that it will continue to produce the goods and services and provide the jobs that people need.”
How far do you think things can go before the money economy outright collapses? Even with all the gimmicks and financial sorcery, surely it must be hit with reality eventually, right? Or perhaps it can sustain itself indefinitely as the real economy withers until political upheaval arises to destroy it?[/quote]
[quote]Nephite, the money economy can outlast nearly all of the real economy. It’s quite possible that the stock market will hit all time highs on the day that the power goes out in Manhattan forever and armed raiders cross the George Washington Bridge in search of loot and slaughter.[/quote]
https://ecosophia.net/economics-hallucinated-wealth-revisited/
This is sentiment, which is based on imagination. The only basis it has in reality is the rear view mirror which is always what creates the conditions for positive imagination-based sentiment. That being sentiment is most positive at tops and sometimes bottoms. At the gold bottom in 2001, people imagined gold would be mined from sea water for about $10 per ounce. Forget about doing the calculations based on real world constraints.
Circling back to what Hugo Salinas Price said about imagination vs reality, it's possible for imagination to break from reality for a time or, in this case, for a long time. But stock markets do have to have a basis in reality with respect to earnings (and their growth) and interest rates.
Earnings have to come from somewhere. They can be counterfeited for a time and they were. That game is pretty much over (see next paragraph). The last gasps are things like the $1,000 Trump Accounts which probably have to be invested into stocks, the purpose of which would be to keep the bubble moving until midterms, I suppose. They can be stolen from the private market for a time and they still are, but that game is winding down because stolen money must have a source from the real economy which eventually becomes a destitute real economy the more that gets stolen out of it. They can be faked for a time and they still are. But the Enrons and WorldComs of the world always get exposed by somebody and that reality based fact hasn't changed either. There are multitudinous discussions occurring right now about OpenAI being a fraud. If the stock market drops due to an interest rate rise or some other reason those discussions will probably gather momentum.
If the 10 year breaks higher to 6 percent and more, no, the stock market will not grow to the sky no matter how much that may be ingrained in someone's imagination. I'm not saying the 10 year will do that, just that interest rates form a basis of reality for what the stock market can do and, obviously the Fed can't hold interest rates down forever without popping the inflation genie out of the bottle.