An example might be helpful.
In the 1800s, aluminum was more valuable than gold. It was very difficult to produce and it was valued very highly. Then someone figured out a way to extract it from the ore much more efficiently, making it much easier to obtain and much more common. If you had owned a $500 chunk of aluminum, it had that value because of its rarity; other people recognized it as being more valuable because it was more difficult to get. When it became more common, its value could have dropped to $50 (I don’t know how much the price actually dropped, but it was a lot).
Where did the $450 go? Nowhere, because monetary value is based on how much people are willing to pay, and unlike a physical substance it is not necessarily conserved; it can be created or destroyed. This is also how stocks work.
You can also create monetary value by transforming materials into a worked product (think knitting a sweater) or destroying something that took work to make (burning that same sweater). Unlike the stock market though, the price of physical goods is often based on their usefulness rather than speculation, so it tends to be more stable.
An elongated muskrat made off with it
shredder. for “security”
Cotton eye Joe.
nowhere, the total amount of money in the world is zero. one man’s dollar is another man’s debt. if somebody loses money, somebody else loses debt, so the net sum is still zero.
The total amount of money is not zero. Gold, for instance, is real money.
But if course debt pseudo money dwarfs it.
Ehh, this is not a good way to think about it.
It’s more like money borrows value from the future.
It’s not real. It’s just gambling for rich people. Occasionally they use it to steal from our retirement.
Agreed. It wasn’t real when it was there and it isn’t real now that it isn’t.
It didn’t go anywhere, because it was never real. Market cap is not the same as cash. The fact that Apple stock multiplied by its price is trillion, doesn’t mean you can sell trillion worth of apple stock and get trillion dollars in exchange. At that point price starts to respond to your transaction
because it was never real. Market cap is not the same as cash
btw cash is no more real than company shares. both are paper and numbers in a database.
Are we going down the gold standard discussion path here?
Gold standard is just moving the arbitrary holder of value down the line.
Shiny rock also has no intrinsic value
You’re like a top poster of c/stocks, shouldn’t you of all people know?
It only ends up being really “there” if the stake- and stockholders withdraw their shares and cash out. It’s all paper valuations.
Many billionaires are actually what is known as paper tigers in that their wealth assets aren’t real, (as in real estate) because the “wealth” is based on numbers on balance sheets and little else.
I think it’s absurd the argument gets made that rich people aren’t rich because their assets aren’t real like cash, meanwhile they leverage those assets into loans that are absolutley real and tax-free.
The value is real. The absurdity needs to stop. You can’t say “tax the rich” out of one side of your mouth and then turn around and say “their wealth isn’t real” out of the other. This manipulation of terminolgy to obfuscate how wealth and assets work is pushed by the wealthy themselves to avoid anything that might increase their chances of being taxed. Seriously, if they came out and said “I’m rich as fuck thanks to my assets that I leverage into tax free loans!” How long do you think they’d last? Instead we argue over how “real” things are and say things like “The rich don’t actually have a lot of money…”
Yes, it’s something a lot of people don’t seem to understand. The “value” of a company is it’s stock price multiplied by all the shares and the stock price is pretty much just the last price someone was willing to buy a share at.
If everyone goes and sells all of their Tesla and SpaceX stock and nobody ever buys any again, Elon Musk might not even be a billionaire anymore.
Musk would definitely still be a billionaire.
He sold $1.2 Billion in SpaceX stock just 4 months ago. He sold $22.9 Billion in Tesla stock in 2022, partly to fund buying twitter.
He’s 100% diversified some of that at the very least, even if he’s just parked some of it in the S&P and bonds. He also owns a couple hundred million in real estate.
He wouldn’t be worth over $800 Billion, but he’d absolutely have at least $1 Billion.
Nobody even HAS to sell their shares, the second part is what does all the lifting here: “and nobody ever buys the shares again”.
If overnight, everyone just said “I have no interest in buying at any price” that’s the end of it. The shares are now worthless.
Every seller needs a buyer. If “everyone sold their shares”, all that happened is the share owners changed.
God, wouldn’t that be a dream!
North Korea.
I still scroll through Reddit through redlib and it’s wild how often I see reposts from Reddit making its way word for word to Lemmy.
You know what the bots think, what about people?
No stupid questions is the worst run community in all of lemmy. That place is a cancer and should be burnt with fire.
burp
Valuation owes more to perception than utility. If the perception of worth shrinks, the price deflates accordingly.
So it is not actual value of anything that disappeared, but rather that prices fell.
It’s on paper. It never existed to begin with. Just like saying the rock in a ditch I found is worth 200 million dollars. Then, when I couldn’t sell it, I revalued it at only 100 million dollars. So, the extra 100 million didn’t go anywhere. “Value” is a truly subjective thing which is encompassed by the old phrase “One man’s trash is another man’s treasure”.
Damn you got a $100m rock? I’ll give you $20 for it.
You just crashed the entire stone futures market.
I’ve got a rock with gold paint on the outside, worth $500,000,000. Could I interest you in buying it for $30, instead of the lame dull rock that other guy has ?
Bonds, cash and other countries stock market
