Sunday, August 25, 2019

Our Economic Illusions

The economic news on Friday was pretty interesting. Apparently a couple tweets from the President can drop the stock market over 600 points. If the system was logical and sane, it would be impossible for that to happen.

Of course, the stock market has never been rational. People invest using their emotions as least as often as they use their brains. What do you expect from a system that runs on the “greater fool” system. The idea is that someone even more foolish than you will pay more.

Money itself is an illusion. The almighty dollar only has value because the government says it has value. Don’t even get me started on currency manipulation. In spite of all that the system mostly works.


Sometimes everyone loses faith and it ends in tears. Maybe the fact that a few tweets can upset the system so easily is a sign that the faith isn’t too strong? There’s always another financial crash coming. Timing though -there’s the rub.

While much of the economic system is an illusion, parts of it are very real indeed. Our International trade battles have consequences. The disappearance of retail has consequences. The closure of manufacturing plants have consequences. Savings rates, pensions, interest rates and a whole lot more have real effects on the individual.

One of the reasons I’m taking care of a lot of little things right now is that the systems could have a real glitch. My fear is that we’ll look for the man behind the curtain and no one will be there.



  1. If one tweet makes one bear, how many for sixbears? I'll pray for sixbulls instead.

    1. Ha!

      Bears, bulls . . . the market is a beastly business.

  2. And yet the economy has crashed constantly over the centuries and man has survived. You're wise to plan ahead without panicking.

    1. Indeed. There's a lot of people out there who've never experienced a real recession, never mind a depression. There's going to be a steep learning curve.

  3. $$ is simply an item that is exchangeable for whatever the seller thinks it is worth. I gave up trying to understand the stock market a long time ago, those are some bat crap crazy people there. Good News for us is Bad News for them. Low interest good for them - bad for us who are saving $$$ in bank.

    Just crazy logic. And the real funny thing - there is no such thing as enough money for anyone.