How does the stock market create social production or wealth?

[Ray Eston Smith Jr]

In theory, the stock market allocates resources to the most productive companies. In practice, I don't know if it really works. For years, stock prices have been unrealistically high, higher than what would be calcluated from company earnings and growth in earnings. Those inflated stock prices would seem to divorce the stock market from the realities of the real market economy.

Stocks and bonds in theory should create enormous wealth by providing a way for people to make secure investments in corporations they know nothing about. But most of those corportations are run by executives who are paying themselves multi-million dollar salaries. I think they're a bunch of crooks who've been stealing from the stockholders, the employees, and the customers.

We need a way for private free markets to allocate resources at the highest levels. Ludwig von Mises proved logically that it is literally impossible for governments to do that. But we need better institutions than corporations and stock markets. I'm hoping something will evolve out of the internet.

Ray Eston Smith Jr