I like Whole Foods. In New York, we bought about 50% of our calories from them. There were three stores about equidistant from our apartment.  Anyone who has been in one can tell you how clean they are, how knowledgeable the salespeople are, and what a fantastic selection of really high quality food they stock. I’m a bit of an amatuer foodie, and grocery shopping is always fun for me, but I just had a really good time in these stores. Even the checkout experience is not unpleasant, since they always had at least 10 and sometimes two dozen competent and often friendly clerks working at once.

Their prices on comparable staples were actually usually better than the boring and grungy NYC alternatives, so it was not necessarily a wallet busting habit, unless you went for things like the fancy cheese or boxed snack foods. You can tell that John Mackey and the rest of the crew really care about their stores and good food.

So, while I saw that this stock was a great short, it doesn’t give me the same pleasure as seeing my MER or LEH or COH puts in the money, since a world with fewer Whole Foods is a more drab and dreary and less healthy place. Whole Foods as a concept (a grocery chain that cares about the origins and taste of its wares) doesn’t depend on a credit bubble. It is something that actually enriches our lives, unlike the ponzi schemes of bankers and baubles for the women who love them.

But the credit bubble lead Whole Foods to expand too far too fast, and to depend too much on high-margin and high-priced items like fancy crackers, exotic chocolates and $7-a-pack blueberries. MER and LEH and the rest created the illusion of wealth for the everyman with their easy credit, so people paid those prices and the demand encouraged Whole Foods to build too many stores. I even bet an organic blueberry farmer or two out there expanded his operations and paid a price for land that just isn’t justified now that shoppers only have $2 to spend on berries.

So all of us suffer. Capital was wasted. It was wasted by tearing up the farms and forests to build those new suburbs, it was wasted on the giant new stores, and it was wasted in the efforts of Whole Foods tasters and executives to search out the most exotic snack foods, price be damned, as it was wasted by the manufacturers of those snack foods. It was a waste because those allocations of physical assets and real efforts were based on an illusion of wealth created from nothing: credit.

The banks created credit out of nothing, due to the magical fraud of fractional reserve lending. They had a bit of real wealth on deposit, the product of actual work and production and savings, yet they created many times that amount more dollars to lend out, just because they could. Because they knew that when the castles built by those new dollars came crumbling down, they wouldn’t be on the hook, since Uncle Sam has always had their back. Old Uncle Sam knows what’s good for him, doesn’t he?

If it were only good for the rest of us.