Benchmark = price, not value
Benchmarks and reserves work when they reflect the real distribution of consequence in the system. That distribution is asymmetric, and price is the only mechanism that can condense it accurately and continuously.
They provide a neutral, non-negotiable reference that the system can coordinate around.
That requires:
Observability
Replicability
Enforceability
All three live in price, not value.
Value is interpretive.
Benchmarks cannot be.
Why value-based benchmarks always collapse
A realistic benchmark must:
overweight what matters
underweight what doesn’t
reflect asymmetry honestly
If it didn’t, it would be less representative, not more.
Trying to force representation would:
dilute signal
hide stress
misstate risk
Markets don’t tolerate that.
They default back to price every time.
You can disagree with the benchmark — but you can’t ignore its concentration and still compete.
Benchmarks and reserves aren’t judgments about worth — they’re agreements about reference.
And reference can only be enforced through price.
I am describing how large-scale systems stay coherent.
The Lesson: Don’t be misaligned with consequence.
That’s the throughline from:
reserve currencies
benchmarks
indices
portfolios