The current Stock Market is not part of a true free market

99% of those who agree with you wouldn't understand what a radical understatement that is.

would include legalizing insider trading. Are you in favor of that?

I am. And I would think Dr. Paul is in favor of legalizing it too.

I ask because those who wants free markets often don't know what a free market entails.

1) high costs of entry due to regulatory compliance - this favors big business over small business; as we've seen corporations are likely to grow the fastest and largest

2) corporate welfare and other privileges - this is like the bear stearns bailout, but also applies to annual subsidies, such as the agricultural subsidies which have led to consolidation of the industry. it also applies to regulations designed to hurt competitors for no good reason or regulations being unequally enforced. also, consider whether a small business wanting some land or a corporate manufacturer will be more likely to use the state's power of eminent domain to forcefully get the land they want. Corporations/big business have more lobbying power.

3) debt system of money - this does two things. being inflationary, it hurts the ability to invest in currency. This means people are more inclined to more easily and quickly invest their money, looking to the stock market to do so. If they were able to save currency without loss of value, waiting for the right investment opportunity, we'd see a lot more "venture capitalism" that is actually funded by the savings from productive activities, rather than bank credit. Others, who are wary of the stock market simply put their money in the bank. Once again, this is a quick, easy means to invest money. But putting money in the bank fuels the credit creation process, which ends up hurting the value of the currency, which continually makes the stock market look like a great place to invest.

4) public traditions, ignorance, and confusion - a large part of the poor investment is based simply upon public traditions, like pricing everything in dollars, which are no longer associated with a baseline of value (as denoted by gold weights) but with the value of a Federal Reserve Note. This simple tradition causes massive economic confusion, such as a lack of understanding that minimum wage rates are falling, and our stock prices can go up while losing real value. When many people are confronted with realizations about the lack of productivity in America, the failing dollar, the enormous amount of debt being used as money, that our money system is run by a banking cartel, and that the whole system could come to a crash, they gladly put blinders on with excuses such as "Europe and Asia do it" or "that's how modern economies work". Yeah, that's how Japan's modern economy DIDN'T work in the 90's. Anyway, refusal to believe the system is unsustainable and corrupt leads to the phony assumptions that higher stock prices are a sign of gains, and that the stock market is the best way to create gains.

5) limited liability and corporate rights - the supreme court allowed the due process clause to be attached to corporations in overturning state regulations. this along with limitation of liability for stockholders allowed the stock market to turn into the unaccountable beast it is today, trumping private property rights (eminent domain used for corporate interests, refusal to punish pollution). Also, as a side effect, we now have corporate operators deceiving their shareholders in massive ways with little punishment when and if caught.

6) Avoiding the income tax - with the tax structure the way it is, many rich people seek to avoid taxes. one means of doing so is to move income into capital gains. rather than being paid in dollars and taxed at 33%, why not take corporate stocks, which if held for over a year are only taxed at 15%? Another means to do so is to move your real gains off-shore. International corporations can help this process, by moving one's income to the nation with the least tax. One would move their income as such by over or under charging for goods between the two legally seperate entities, even though they have the same ownership. For example, if country A manufacturers my good but has a high rate of tax, then i sell it to my company in country B who was low taxes for next to nothing. Then i have country B's co sell to country C for extremely high prices where it will actually be sold to consumers for its real prices. Now, according to country's A and C I took losses, but saw tremendous profits in country B, where it can remain untaxed. Then there's the Roth IRA's, which are one of the only means available to the little guy to avoid taxes, except that they fuel the stock market as well.

7) Corporate taxes - the least taxed method of corporate income is simple reinvestment in the company, rather than dividend payments, or other means of releasing profits. This perpetuates anti-consumerism in the rich, who are pushed further and further toward corporate investment.

The stock market has never been part of a truely free market. Its always been rigged by the insiders................... Just my opinion, of course. Just another reason why we need to return to real money.

We have not had a free market in years we are not even a capitalist society.
We are a corportalist society that is ready to retool for the 2009 model year.
They are introducing the NWO with its new slick lines and promises it will be our salvation and people will be dazzled by all the bells and whistles. The maker UN has placed a price tag of total submission but people will take the bait because they are offering no interest no money down payments. Such a deal who could resist a bargain. (sarcasm) Peace

...we would neeed a free market on currency, too, but the stock market is illegitimate at a more basic level. Corporations themselves, those things which are divided into shares sold on the stock markets, whose debts are sold on the bond markets, are fictions established by fascist (government/business partnership) laws. These infintesimal divisions of fictions and the debts they owe are valued only because people are forced to play along and treat these corporate persons as actual persons. In reality, only a contract between actual beings should be enforceable; how can you enforce a contract with a fiction? Can leprechauns sue me? Corporations are the same, except these magical green men are real, because the government says they are real, and can make contracts and own things and sue and have freedom of speech and own things. In a free market, the current stock and bond markets would not exist, at least not nearly at the scale they are today. Horror of horrors, people might need to start looking at something more substantive to guage the health of the economy.

We have not had a free market in the US in a very long time. Ours is an overly manipulated and regulated market.

For example, consider what the Federal Reserve did with bailing out Bear Stearns.

In addition to that, I have read about some group within the government referred to as the "Plunge Protection Team" and even more concerning is how the various market indexes (Dow, Nasdaq, S&P 500) swap out unfavorable companies. Supposedly there have been many times when companies that would have significantly impacted the indexes in a negative way were removed and replaced by other companies that were doing well...

It's almost as if we simply cannot really trust the market in the US...

Since the Fed has kept interest rates at the banks at 2-3% for over a decade now, no one keeps their money in the bank any more. They have been essentially forced to invest their money in the stock market in order to get a decent return on their money.

Does this mean that ALL of our stocks are over-valued? Over-inflated?

Of course it does.

So... our dollar is worthless and our stock market is overinflated.

Can you say, "This is a scenario that could make the 1929 crash look like the gold rush!"??

I thought you could.

always deserve a bump.

I'll have to do some thinking!