The markets, the markets. Oh, swami, what is the true nature of the markets? Well, pick from column A or column B, this being a Chinese-menu essay. In column A, markets are whirlwinds of greed, delirium and Dionysian rapaciousness. Historically, markets are associated with sex, sin and long black cars, probably because of the baleful influence of money, not to say Oliver Stone. Markets are urban, relativistic, cosmopolitan, materialistic, destructive. Column B offers a different view: Markets are efficient, rational, predictive to the happy shores of omniscience. From B's markets spring growth, liquidity, a button-popping optimism. They gestate life-enhancing equilibriums, which are visible signs of God's hidden poker hand. They are mechanisms of virtue. Their ways may be obscure or counterintuitive, but markets randomly lead to optimal outcomes unless fussed with by atheistic commies, bureaucrats or politicians. Now a tension arises from these neat dichotomies. From roughly the '70s on, the apostles of rational markets have been able to paper over traditional associations laced with suspect cosmopolitanism and sin, particularly of the old-fashioned racy sort. They have been able to advance the argument, in other words, that markets weren't dens of fallen nogoodniks but key -- the key -- energy sources for the economy. Clean energy.

That alliance was always fragile; and now, post-2008, it's flapping in the wind. Not only have rational markets come under attack, but various forces on both left (Occupy Wall Street) and right (the Tea Party) have launched their missiles at, say, Mitt Romney's tenure at Bain Capital, M&A or globalization. It's true, often those missiles hit the other camp or end up in North Korea. But particularly in an election year, the tenuous pact between free markets and fundamental values -- Ayn Rand meets Jesus -- persists. There's more than just votes at stake. Part of the reason we take such a polarized approach is because it simplifies choice. But markets are neither pork fried rice nor General Ching's chicken. They're complex social phenomena that flash tendencies depending on context. They're neither good nor bad; they're (commie alert!) ambiguous. In August, Financial Times columnist John Kay wrote a column managing to undercut two common ways of thinking about economics. Kay opens with the tendency to translate complex social situations as probabilities. Probabilities, he notes, are swell for games of chance, but "most of the problems we face in the business and financial world -- or in our personal lives -- are not like that." When this fails, we construct stories, which are similarly problematic. "We are predisposed to find evidence that confirms our existing beliefs. That leads some people to become obsessed with narratives that offer theories of everything: communism, libertarianism, religious and environmental fundamentalism; more mundane fantasies such as the inevitability of house price appreciation; or the magical properties of securitization."

Let me offer a complementary off-the-cuff hypothesis. The persistence and power of false narratives rise as markets grow larger and larger and shorter and shorter. Put another way: In short-term trading markets, the "truth" gets quotation marks. Markets, long-term and short, tend to fulfill that Keynesian metaphor of the fashion show (yes, that's a story, if a brilliant one). The difference lies in the sophistication of the narratives. If trading markets are short enough, information doesn't need to be true. Validity has no validity. Truths are for chumps or monks. There are only stories: gossip, rumor, speculation, data points, the odd scoop. The problem with high-frequency trading is not only that it raises questions of equity and systemic risk, but that it's quite literally brainless. The algorithms that drive it may involve cutting-edge programming, but they have no meaning in a larger world. They are analytical free riders (not unlike indexing). This is just as corrosive as banks that no longer need to be accountable for loans, which they offload into markets. It represents a larger breakdown of analysis and accountability, a flight from reality. At the very least, how do you practice financial journalism in such a world?

This breakdown is broader and deeper than just the markets. Consider our poll-driven politics, which are both polarized and fabulist. Sure, politics has always trafficked in hot air and exaggeration. But today it's attached to a media amplifier that booms out the daily charges, conspiracies, factoids and memes. The Internet is really good at this, particularly because what's real has quickly become what's clickable, and what's difficult, complex or true gets less and less traction. Of course, we know all that: It's a prominent meme in our menu of memes. But it helps explain the irrationality that shadows our mighty, deep and rational markets. And it suggests why we find ourselves increasingly incapable of dealing with it.