I am not naive. I have spent my life working with insurance companies who set up pension schemes which invest in the stock market. The biggest investors in the market are these pension funds which hold the liquidity of all the major global companies in the world.Wow. The naivete in that is too extraordinary to accurately express.
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The naive are those who do not understand the cycling of debt and money through various instruments which make the system work. It is something of the modern era, which international trading markets and global shipping through containers. As someone pointed out 90% of everything we buy comes through shipping, and in the uk almost everything not directly made in the UK which currently is very little.
If you want an example of how fractional reserve lending fails, Northern rock and its cause of a run on the market.
In the UK it was HBOS taking out a 180 billion pound short term load from the credit markets which would have bankcrupted Halifax building society, the biggest mortage lender in the country. The reality of these systems was thought so secure, AAA rated capital was thought to only have a 2% annual fluctuation in value so covering at 5% was adequate. The fact the capital was based on mortgages from insecure payers (sub prime), with a falling house price market meant a liability of 10% or 15% became real, which was impossible short term to meet, causing a fire sale, which in the market terms would cause contagion leading to market melt down, which governments had to stop.
So I know why this market works and its vulnerability. The modern question is it cannot continually increasing the debt beyond repayment terms, but given Covid, that is where we are going. Some suggest it does not matter, because given our buy in to the system, the system will just carry on. They maybe right, because the system is just a measure of potential work value, and illusory wealth is only wealth when realised.
Certainly what works today may not work tomorrow, but then again with shifting social pressures and resource needs, maybe given time, we will all just adjust.
God bless you