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The market, as we're all painfully aware in the aftermath of the banking crisis, can be an idiot. It has no perception of right or wrong, or even sensible or insane. It sees profit.

The only reason investors haven't run screaming from an obviously corrupt financial marketplace is because the government has gone to such extraordinary lengths to sell the narrative that the problems of 2008 have been fixed.

Narrative drives most of economics. Everything seems to be part of a story, and how that story is told often leads to critical error.

It's mostly the financial chicanery that's going on. People are saying 'What kind of trust can we put in this market?'

Markets are frequently ahead of, and often out of sync with, the economy.

If you have a mental model that says big corporations are fundamentally greedy and selfish and exploitative, you don't really want to have an exception to that model. It's much easier to say, 'Yes, Whole Foods has been corrupted.'

Most investors give too much credence to the theory that prices are rational; they presume that a market collapse must have been justified by serious economic trouble.

The market is incredibly inefficient and capable on rare occasions of being utterly dysfunctional. And people have a really hard time getting their brain around that fact. They want to believe that it's approximately efficient almost all the time, and it simply isn't true.

Fear not, the people may be deluded for a moment, but cannot be corrupted.

What we need to understand is, one, that there are market failures; and two, that there are things like asset bubbles and irrational exuberance. There are periods of booms, bubbles, and manias. These things, if left to themselves, can lead to crashes, to busts, to panics.