Where Will Money Go?

[Martin Hash]

There’s a tremendous amount of money in the world, way more than there are things to buy at their current prices. Why would the Stock Market go down even if there was a true crash? Where would that money go. A lot would evaporate but the vast majority would have to land somewhere: Gold? Real Estate? Bitcoin? Bitcoin would be the best because it’s purely imaginary and its value wouldn’t cause inflation. Gold is similar, especially paper gold. However, if all that money went into Real Estate or something tangible, that would be inflationary. Still most people wouldn’t be affected, they don’t have anything to lose.

[SuburbanFarmer]

There’s a tremendous amount of money in the world, way more than there are things to buy at their current prices.

You answered your own question homie.
Inflation is coming.

[Martin Hash]

There’s a tremendous amount of money in the world, way more than there are things to buy at their current prices.

You answered your own question homie.
Inflation is coming.

I’m filling in my Golden Age Action comics collection with my cash.

[DBTrek]

Here's a crackpot theory I put together while buzzed last night:

1. Fed prints money gives it to banks (M0 money supply)
2. Banks buy off toxic assets, mortgage backed loans, and buy stocks.
3. Inflation hits home prices and stock market.

So ... how do you reel everything back in? The answer is built into the process if you look closely.

4. Banks mass SELL their inflated assets (stocks and mortgages) as prices are at all time highs, crashing the markets. Trillions of (inflated) dollars wiped out ... but not for the banks, just for the other investors who didn't see the selloff coming.

Banks keep their trillions. Inflation is tamed through the losses of non-bank investors and real estate owners.

[SuburbanFarmer]

Here's a crackpot theory I put together while buzzed last night:

1. Fed prints money gives it to banks (M0 money supply)
2. Banks buy off toxic assets, mortgage backed loans, and buy stocks.
3. Inflation hits home prices and stock market.

So ... how do you reel everything back in? The answer is built into the process if you look closely.

4. Banks mass SELL their inflated assets (stocks and mortgages) as prices are at all time highs, crashing the markets. Trillions of (inflated) dollars wiped out ... but not for the banks, just for the other investors who didn't see the selloff coming.

Banks keep their trillions. Inflation is tamed through the losses of non-bank investors and real estate owners.

Same trillions are still in existence though. They didn’t disappear. Banks buying stuff after the crash still creates the same inflation.

[DBTrek]

Same trillions are still in existence though. They didn’t disappear. Banks buying stuff after the crash still creates the same inflation.

You and me (a bank) buy a stock for $100. Total value in play $200.
I sell mine at $100 ... so do all the other banks, unbeknownst to you.
Stock crashes to $30.
You sell.

Now I have $100 from my stock sale, and you have $30. Total value in play $130.

See that? I just took a 35% chunk out of the money supply.
Sure, your other dollars my still "exist" on record somewhere, but they don't belong to you.
They belong to the evaporated value of the stock I crashed.

[Martin Hash]

Money is imaginary and can evaporate at any time. When the Bitcoin Ponzi scam crashes, $trillions will simply disappear.

[Fife]

A person only recognizes a loss (or gain) when an asset is sold. Until then, all that delicious "money" is just a ledger entry of the asset's predicted current market value. The money that was spent on that asset still exists, just in other peoples' pockets. When one sells an asset, a buyer has to come up with actual cash in existence to buy it. Bubbles don't create money, or destroy it. Bubbles do induce people to spend more on assets than they are actually worth. Bye, bye, money!

Governmental inflation of the money supply destroys (dilutes) the value of the fiat money. It also creates bubbles in asset prices.

[SuburbanFarmer]

Same trillions are still in existence though. They didn’t disappear. Banks buying stuff after the crash still creates the same inflation.

You and me (a bank) buy a stock for $100. Total value in play $200.
I sell mine at $100 ... so do all the other banks, unbeknownst to you.
Stock crashes to $30.
You sell.

Now I have $100 from my stock sale, and you have $30. Total value in play $130.

See that? I just took a 35% chunk out of the money supply.
Sure, your other dollars my still "exist" on record somewhere, but they don't belong to you.
They belong to the evaporated value of the stock I crashed.

My original $100 is already in the hands of whoever I bought that stock from. I have the same silly stock certificate, whether it’s worth $30 or $3,000.

If I sell that stock, someone else hands me their money for it. No money has disappeared from the supply, only how much I expected to get eventually.

[Martin Hash]

Same trillions are still in existence though. They didn’t disappear. Banks buying stuff after the crash still creates the same inflation.

You and me (a bank) buy a stock for $100. Total value in play $200.
I sell mine at $100 ... so do all the other banks, unbeknownst to you.
Stock crashes to $30.
You sell.

Now I have $100 from my stock sale, and you have $30. Total value in play $130.

See that? I just took a 35% chunk out of the money supply.
Sure, your other dollars my still "exist" on record somewhere, but they don't belong to you.
They belong to the evaporated value of the stock I crashed.

My original $100 is already in the hands of whoever I bought that stock from. I have the same silly stock certificate, whether it’s worth $30 or $3,000.

If I sell that stock, someone else hands me their money for it. No money has disappeared from the supply, only how much I expected to get eventually.

Of course the money's disappeared; when they add up all the money in the world, they include Market Cap.