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In Chapter 5, Nick describes Gatsby's self-creation and his idealization of Daisy as follows:
“There must have been moments, even that afternoon, when Daisy tumbled short of his dreams—not through her own fault, but because of the colossal vitality of his illusion. It had gone beyond her, beyond everything. He had thrown himself into it with a creative passion, adding to it all the time, decking it out with every bright feather that drifted his way. No amount of fire or freshness can challenge what a man will store up in his ghostly heart.”
Nick says, or thinks, “it” had gone beyond everything. “It” refers to the illusion of Gatsby himself, his relationship with Daisy and Gatsby's elevation of Daisy. Gatsby's transformation from poor farm boy to rich socialite is dramatic. He has spent all of his time, since the war, making himself a new persona. His illusions are colossal because they are only loosely based in reality and therefore are more fantastic than reality can be. Gatsby's vision of Daisy, over those post-war years, had continued to increase into an impossible ideal. Although he seemed happy when he was reunited with her, he had a slight bit of doubt. Not to mention, she was still married and she could not possibly live up to that princess on a pedestal that Gatsby had created in his mind.
This is not an indictment of making yourself better or wanting to follow a dream. It is an indictment about idealization, particularly when it comes to human relationships. It is also an indictment of the American dream which, like Gatsby's own illusion, is potentially a myth, something that is a lofty idea, but not possible in the real world.
Note that Gatsby sustained this idea of he and Daisy being together. She moved on with her life and got married. Gatsby is a tragic figure. His greatness, that is to say he is The Great Gatsby because he created a new persona and with it, a complete, yet only potential world, (in which he and Daisy are together) which unfortunately for him could not manifest in reality. Even when they are briefly together, the reality can't match his dream. It is “colossal” in the lengths he went to in order to win Daisy back. This took years of his life designed around this one goal and he was willing to engage in criminal acts to achieve that goal. Going to any means to achieve what might be (and was) an impossible end is a colossal undertaking.
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