Real Resources Matter—Paper Assets Just Blur and Blow Bubbles
July 24, 2025
Haunted by the spectral wisdom of Michael Burry’s glass eye, Ray Dalio’s cycles, Stanley Druckenmiller’s timing, Paul Tudor Jones’s charts, George Soros’s reflexivity, Jesse Livermore’s tape reading, Benjamin Graham’s margins, John Templeton’s contrarianism, Nathan Rothschild’s carrier pigeons, and John Law’s Mississippi madness—I write this from the graveyard of paper dreams.
The Weight of Iron vs. The Lightness of Zeroes
In 1720, John Law convinced France that paper could create wealth from nothing. The Mississippi Company’s shares soared 6,000% on promises of Louisiana gold that existed mainly in feverish imaginations. When reality knocked—as it always does—the paper burned, but the actual French iron mines, wheat fields, and vineyards remained. They fed people. They built things. They were.
Fast forward to 2021: A digital token featuring a Shiba Inu dog achieved a $41 billion market cap. No utility. No assets. No production. Just belief, leverage, and the eternal human capacity to mistake the symbol for the substance.
Here’s what the ghosts whisper: Every bubble is the same story wearing different clothes. The plot never changes—only the costumes.
When Abstraction Becomes Religion
“Price is what you pay, value is what you get,” Benjamin Graham muttered, watching the 1929 tape destroy paper fortunes while steel mills and oil wells kept pumping. But humans love abstraction. We’re pattern-seeking primates who turned scratches on clay tablets into currency, then turned currency into derivatives, then derivatives into synthetic CDOs, then synthetic CDOs into… well, you lived through 2008.
The dot-com era perfected this art. Pets.com—$300 million market cap for selling dog food online at a loss. But the servers running their website? Real silicon, real copper, real energy. When the company vaporized, the infrastructure remained. The paper wealth? Gone like morning mist.
Jesse Livermore knew this in his bones: “There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
The Commodity Truth Nobody Wants to Hear
Cut through flesh, you find bone. Cut through markets, you find commodities.
Every Tesla needs lithium—real lithium, mined from real earth. Every data center devouring electricity to mine Bitcoin needs copper wire—real copper, smelted from real ore. Every apartment building in Manhattan sits on real land, constrained by real physics.
Ray Dalio’s “All Weather” philosophy gets this: In the long arc, what matters is purchasing power preservation, and nothing preserves like the stuff civilization actually needs. During Weimar’s hyperinflation, a wheelbarrow of marks couldn’t buy bread, but a gold coin could. During Zimbabwe’s currency apocalypse, diesel fuel became money because diesel does things.
The psychology is brutal in its simplicity: We’d rather own claims on claims on claims than own the thing itself. It’s cleaner. It’s easier. It’s more sophisticated. Until it isn’t.
Tulips, Houses, and Digital Nothing
1637: A single tulip bulb—Semper Augustus—trades for the price of an Amsterdam mansion. The bulb dies. The mansion stands 400 years later.
2007: A Miami condo—pre-construction, existing only as architectural renderings—flips three times before groundbreaking. Leverage stacks on leverage. When the music stops, the paper wealth evaporates, but Miami’s land remains exactly where geography placed it.
2022: NFTs of cartoon apes sell for millions. The Ethereum blockchain burns actual electricity—coal and natural gas transformed into computation—to record ownership of… what exactly? The energy is gone forever. The ape jpeg remains infinitely copyable.
George Soros called this reflexivity: perception creates reality creates perception. But reflexivity has limits. You can’t eat perception. You can’t burn perception for heat. You can’t build with perception.
The Great Abstraction Machine
Modern finance is an abstraction machine. We take a farm (real), create a deed (paper), mortgage the deed (more paper), securitize the mortgage (even more paper), create derivatives on the securities (paper squared), then synthetic derivatives betting on the derivatives (paper cubed).
Each layer adds fragility. Each layer adds complexity. Each layer adds someone taking a cut. And when the unwinding comes—as it always does—we rediscover that you can’t live in a mortgage-backed security.
Michael Burry saw this with autistic clarity in 2005: “I met my first mortgage broker in 2003. He laughed about making $5,000 per loan, moving borrowers from 7% to 11% rates. The borrowers didn’t care—they were flipping houses. Everyone was flipping something. But underneath were actual houses that actual people needed to actually afford.”
The paper multiplied. The houses didn’t.
What Remains When the Music Stops
Druckenmiller made his fortune understanding this: “Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity.”
But liquidity is just lubrication. The machine itself is built from real things:
- Energy: Every transaction, every computation, every transport requires it
- Metals: Copper for electricity, steel for structure, lithium for batteries
- Food: Three missed meals from chaos, always
- Land: They’re not making more of it, despite what the metaverse sellers claim
When the Turkish lira collapses, Turks buy gold. When Lebanon’s banks freeze, Lebanese hoard dollars and diesel. When supply chains crack, nobody hoards NFTs.
Paul Tudor Jones understood: “The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge.”
But information isn’t wisdom. Knowledge isn’t substance. The map isn’t the territory, and the price isn’t the thing.
The Meta-Lesson of All Bubbles
Nathan Rothschild made his fortune on information asymmetry about Napoleon’s defeat. But his real edge? He owned actual gold to move between actual nations fighting an actual war. The information was valuable only because the gold was real.
Every bubble teaches the same lesson differently:
- Tulips taught us beauty doesn’t compound
- The South Sea taught us colonial dreams don’t create colonies
- 1929 taught us leverage amplifies both ways
- Dot-com taught us eyeballs aren’t earnings
- 2008 taught us financial engineering can’t engineer away risk
- Crypto taught us code isn’t commerce
The lesson? Paper assets are claims on reality, not reality itself. When confidence cracks, claims collapse, but reality remains stubbornly, physically present.
“In the short run, the market is a voting machine but in the long run, it is a weighing machine,” Graham observed. And weight—real, physical weight—is what ultimately matters.
We stack abstractions like children building card houses, each generation convinced they’ve discovered the secret to building higher. But gravity remains undefeated. Physics remains undefeated. Thermodynamics remains undefeated.
Real resources matter because they obey real laws. Paper assets blow bubbles because they obey only human psychology—and human psychology is a fickle mistress who invariably falls for the same con man wearing a new suit.
The ghosts of traders past don’t haunt me because they lost fortunes. They haunt me because they saw the pattern, spoke the warning, and watched the world ignore them anyway. Again. And again. And again.
The wheel turns. The bubbles inflate. The paper multiplies. But in the end, as in the beginning, what matters is what you can touch, burn, eat, or build with.
Everything else is just expensive fiction.
