“Irrational Exuberance Is Something That Disappears Into Thin Air. It Is a Psychological Phenomenon, It Does Not Have Economic Validity. But Businesses Count It As Real. So They Make Plans Based on a Belief That That Money Will Be Around. When It Disappears, Those Plans Are Put at Risk of Failing.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“So hundreds of thousands of businesses would not have gone under. And millions of workers would not have been thrown out of their jobs. ”

Wrong. Businesses do not fold because of stock price. They fold due to lack of profit and/or capital. That is how it should work. Why should any business have endless access to debt?

Irrational exuberance is something that disappears into thin air. It is a psychological phenomenon, it does not have economic validity. But businesses count it as real. So they make plans based on a belief that that money will be around. When it disappears, those plans are put at risk of failing. If irrational exuberance is a real thing (Shiller was awarded a Nobel prize for his discovery of it), then it certainly can cause businesses to fail

We all should be doing everything in our power to keep irrational exuberance as limited as possible, To do that, we need to open every site to honest posting re the last 39 years of peer-reviewed research in this field.

Rob