>Where will the capital go in the case of a mad rush out of the US
>stock market?!?
Could go into thin air. It doesn't take much actual money to move prices up or down. That's why they call it fictitious.
Returning to one of your older points, the current Fortune has an article claiming the U.S. budget surplus is almost entirely a creature of the bull market. (It's not on their website, unfortunately.) Citing research by Saul Hymans, director of economic forecasting at the University of Michigan, staff writer Anna Bernasek says that the surplus would disappear entirely if the market fell back to a mere 10% annual growth rate (still above historical averages). It's not just the contribution of cap gains that would disappear - a lot of upper bracket incomes would shrink. Max, you buy this?
Doug