Financial bubbles burst when future-productivity claims lose credibility

Evidence

Financial wealth is always a claim on future productivity, but when the credibility of that claim comes into question the financial sector grinds to a halt and securities shed value, causing panic (Akerlof and Shiller 2010; Marazzi 2010, 129–138). Investors stop buying, or, en masse, seek to trade their speculative certificates for more seemingly “real” stores of value (e.g. gold, agricultural commodities, cash). The markets come to a sickening halt, and many are ruined as they realize the fictitious qualities of their capital. — Max Haiven, Cultures of Financialization, 497

Categorization

• DEFINE: Core of Haiven’s ‘fictitious capital’ thesis — connects to the reader’s whole deWaard project.
• XREF: connects to: Finance’s profits came from three interlinked asset bubbles, not efficient markets — Mark Blyth, Austerity: The History of a Dangerous…, 625; Severe financial crises trigger a loss of trust in markets; Financial bubbles burst when current production cannot repay loans borrowed from the future. — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 825 (+4 more)

Broader Connections

• Financial bubbles burst when current production cannot repay loans borrowed from the future. #qualifies (0.85) — Yanis Varoufakis, Technofeudalism, 825
• Imagining a future gain can destroy present wealth #corroborates (0.78) — , A Year of World Stories, 5595
• Financial crashes correct overextended finance relative to depressed industrial production #expands (0.75) — Alex Callinicos, Against Postmodernism, 530
• Bankruptcy and collapsed future expectations erode even established trustworthiness #expands (0.72) — Russell Hardin, Trust and Trustworthiness, 257