Monday, November 5, 2007

Inflating Value

Yesterday I jokingly posted the results of "what is your blog worth?". I found some amusement that somehow this blog could have a dollar value, since it produces nothing tangible or marketable.
But it got me thinking about the inflating value that markets place on assets that have no intrinsic worth. As Citibank is reporting a loss of $11 billion dollars in what are basically unregulated markets that are based purely on speculation, I'm wondering where the next shoe will drop. I look at the stock market which currently operates like a giant casino, as opposed to an actual investment in solid business practices. Google is now the fifth most "valuable" corporation, based on stock prices. This makes no sense. I mean, Google is a wonderful thing, but what do they actually produce? Advertisements to sell products that others produce.
I'm no economist, but I wonder how much of our financial system is really one big ponzi scheme? The real estate bubble assumed that there would always be someone who would pay more for the house in the future. The stock market assumes that someone will be willing to pay more for the stock tomorrow. And the federal budget assumes that other countries will continue to buy our debt.
How many of these "assets" have any more intrinsic value than this blog?

3 comments:

DCup said...

Oh, the Ponzi scheme. Seems a lot like 1929, doesn't it?

I was thinking.....you know what else is a Ponzi type scheme? Christianity. The more souls you bring in, the better your chance for heaven.

Ponzi. It's a structure that supports the weight of the world.

FranIAm said...

Hey Dcup- we are not all that way sister!

OK, enough out of me on that topic!

As for the google ad thing, which I recently started, I noticed that I had written a post (negatively inclined I might add!) about Newt Gingrich and the next thing you know I have a google ad for folks to sign up for his newsletter.

My readers... not really his crowd.

Tom Hilton said...

Great post. I posted an excerpt (linked here) at IIRTZ.