Songfacts®:

• Many of Neil Young's songs discuss his time with the hippie movement, but "Hippie Dream" is actually about David Crosby, who Young played with as part of Crosby, Stills, Nash & Young. In the mid-'80s when Young wrote this song, Crosby was struggling with drug addiction. An iconic '60s counterculture figure, Crosby still espoused many of the ideals of that era. "Hippie Dream" is Young speaking directly to Crosby about these issues.
  
  In Jimmy McDongough's Shakey, producer Joel Bernstein is quoted saying, "I got chills when I heard it. 'Hippie Dream' is a great portrait of David. So cutting."
• The line near the end of the song's second verse, which goes, "But the wooden ships were just a hippie dream," references the Crosby, Stills & Nash song "Wooden Ships," which is sort of a hippie post-apocalyptic fantasy. Immediately after the line, Young adds, "Capsized in excess, if you know what I mean," a clear reference to the excess of Crosby's drug addiction, and probably also an allusion to the substance-abuse problems that took hold of many flower children.
• The song was recorded in an Los Angeles studio room that was normally used to record jingles. The band's volume was too much for the small space, especially the drums, which resulted in a low-quality recording.