Fictitious money

[nancylebov]

http://metahacker.livejournal.com/487990.html?nc=15

For about ten years now, since I started understanding that market capitalization was a made-up number, a mass hallucination of value that couldn't actually be accessed, I have felt like a modern-day Cassandra.

Because it makes no sense, inventing value. The harbinger was, for me, Akamai; when it went public, its 'value' -- its market cap -- briefly soared above that of Apple. Twelve guys, some of whom I knew second-hand, were suddenly "worth" more than a decades-old, successful company with thousands of employees -- or would have been, except I think Apple bought enough Akamai stock to increase its own value. And that's when it became apparent to me this was all fictitious money. You couldn't actually convert this 'value' into real cash, or services; when you tried to sell that stock, its value would fade. It was just a fun illusion on paper, unexecutable.

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I want betting to be illegal. It's harmful, it attracts addicts, and it's not the sort of thing I want in my (financial) neighborhood. I want the stock market to be a *stock* market. I want financial institutions to stay in touch with reality. I want to avoid successive layers of abstraction that make it harder and harder to identify when there's a problem.

I'm not sure that the solution is a feasible legal principle, but that post has good desciptions of the problems.