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Chancellor: Beware the hyperreal financial market


A U.S. one dollar banknote is seen in front of displayed stock graph in this illustration taken May 7, 2021. REUTERS/Dado Ruvic/Illustration

On paper, Americans have never been richer. Their household assets topped $130 trillion at the end of December, up 10% in a year, according to the Federal Reserve. Record levels of wealth during a global pandemic and rolling lockdowns, and after years of low savings and investment, might seem paradoxical – that is until recognising that much of the reported wealth is virtual or hyperreal. Sooner or later, the day will arrive when much of these apparent riches vanish in a puff of smoke.

In a hyperreal world, as depicted in the 1999 sci-fi blockbuster “The Matrix”, an unbridgeable gulf separates appearance from reality. From this perspective, virtual wealth consists of claims not represented by anything of value in the actual world. Like the steak consumed by the Matrix’s villain Cypher, it looks juicy enough…

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