Zimbabwe is an economic hellhole. Inflation is running at 1,000s of percent per year... the economy is collapsing...and the stock market is actually going up faster than any in the world. But Zimbabwe is still worth looking at, because it reminds us of what wealth really is, and that
- given the right circumstances - anyone can turn a dream into a nightmare.

"Living the American Nightmare," says a headline at SFGate.com. The article tells the now-familiar story. People bought houses using no-money-down adjustable rate mortgages. Now, their monthly installments are going up and they can't pay them.

Foreclosures are said to be running at the highest levels in 30 years. California homeowners are in a "tailspin," says TIME magazine. In San Bernardino, for example, foreclosures rose 987% in the second quarter of this year.

And here's a sign of the times on the other coast. In Baltimore, we used to see small signs along the highways telling you to refinance...now the signs say, "Avoid Foreclosure."

Is the subprime problem over...is it "contained"? If so, nobody told the stock market. Hovnanian, the nation's largest homebuilder, is down 82%...and still going down.

But let us return to what we can learn from Zimbabwe...

Real wealth is neither having more money, nor having higher priced stocks. Real wealth is accumulated capital - buildings, tools, factories...and the skills to know how to use them. Wealth can be money too - but only if the money represents real, useful capital. In Zimbabwe, they've got their Zim dollars up the wazoo. But the real capital in the country is fast disappearing - stolen, destroyed, neglected, redistributed, consumed or exported. Under these conditions, increases in stock prices are empty; the stock market in Harare has become a kind of fantasy casino, where people can pretend to get rich by betting against each other.

When the U.S. stock market hit a peak in January of 2000, it looked to us as though we had seen the top. Stocks do not tend to hit another peak once they have just come off a major one. And even if they do, it's not a peak you want to climb. It's too treacherous. You make money by buying low and selling high. Start your climbing in the valley, in other words; it's safer down there...and the only way to go is up. As you go up, it becomes more dangerous. You have farther to fall. Eventually, you will want to get off the trail all together.

"Why bother with any of it?" wonders Capital & Crisis' Chris Mayer. "You can be sure if Wall Street is talking about a stock, it's in your best interest to ignore it. My simple mantra is: You never make money buying the easy stocks that Wall Street buys.

"You see, brokers and advisers tend to recommend stocks when they are 100% sure they are going up. It's called momentum. They look for stocks that have been going up for a while, and hope they continue to go up. I would bet that 99% of advisers are incapable of thinking independently.

"By investing in so-called 'momentum' stocks, you're missing out on significant gains. These 'popular' stocks have already seen their prices surge, and the rest of Wall Street is happy with the remaining measly returns."

Since 2000, the feds did all they could to prevent a real correction. They gave consumers and speculators trillions of dollars' worth of new money. The trouble with this money was the same trouble with the money coming out of the Central Bank of Zimbabwe - it didn't represent real capital. It was just paper money. It had no real value.

You can't get something from nothing, we said. But who cares what we say? The gush of liquidity soon had boats floating all over the planet - stocks, houses, planes, paintings - the great gaudy vessels were soon bumping into each other. Everyone was getting richer - or so they thought. And who could argue with them? People had more money...they could buy more things...what was the problem?

The problem was that the boom was phony...at least, mostly...and mostly in the West. It was an ersatz "Crack Up Boom" created by monetary inflation and speculation. It was easy come, easy go wealth...not the real thing.

"That's why I look for stocks that sweat - that are rich in tangible, physical assets that support the stock price, and sweat cash."

And now here we are - beginning to see it more clearly. Last week, the U.S. stock market suffered its worst week in five years. At the end of it, guess what? The S&P was actually BELOW its high set in January 2000. Adjust that for inflation and stock market investors - on average - have lost 20% to 30% of their money over the last seven and a half years.

Today, Wall Street will be a little jittery. Maybe prices will go up. Maybe they will go down. It hardly matters. Stocks must get back down in the valley again...until then, we're not interested.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.