QUOTE(cherroy @ Jun 24 2013, 09:48 PM)
Deleveraging and deflation in worth means money varnish in thin air, as same as the opposite of money created in thin air.
Yield is getting higher, so those extra cash can buy those higher yield asset.
Remember when a bond being sold down (that resulted yield getting higher), there is still a buyer and a seller.
Money is not always constant, aka if there is 1 million, then the 1 million must be somewhere.
It doesn't.
A simple scenario, if stock market plunging, resulted value become lesser, then where is the money goes?
It varnish.
Nobody is winner, everyone losing money. So 100 million worth become 50 million, where is the 50 million, gone with thin air.
While in bullish market, everyone is making money, who is loser?
No one.
Money become more and more.
Stock market is never a zero sum game.
Only futures market is.
For stock price to move, a transaction has to have taken place
So if u buy at $1 and then tmw the price flew to $1.5 ... the person who sold is $0.5 richer ma. Inversely the person who bought is $1.5 'poorer in cash'
Dun forget when u want to buy something more expensive u need to bring additional money into the game .... in this case $0.5 more
Inversely when stock mkt drop scenario
Say u have this stock for $1
Suddenly drop to $0.8 .... if u dun sell then u dun lose ma ....
If u sell then only u lose $0.2
And dun forget in stock market its paper gain and paper loss ..... no cash is transacted until u actually buy or sell
the money cant just disappear no where right?
I guess you mean value instead? that can disappear as it is non tangible.
do correct me if i am wrong.