Money....Where does it go to?

[wzevon1951]

My friends have been trying to work out what happens to money when the stock market takes a hit? For instance they often say that there has been £50 billion losses on the stack market. Well the little I know about Keynes says that money doesn't disappear, it just gets recycled. So if money has gone it must have gone somewhere, surely? My friend has suggested that it goes to the place where all odd socks and gloves go to, but I am doubtful!! We need an economist to explain!!

[Toby570]

Well I'm no economist but I'll have a stab at this.
When the market takes a hit and reports billions in losses, that's how much shares have been devalued. The money doesn't go anywhere because it never physically existed. If an apple is worth10p today, next week it will be past it's best and worth only 1p. The 9p only existed as a valuation so as it never was it will never be.
I am now prepared for someone who knows what they're talking about to give you the correct answer.

[craft1948]

Shoe shops.................

[Postdog]

I was going to say similar to Toby but I had to leave the page before I could finish. Like he says, it's not "real" money, just an estimation for trading purposes. You will only notice if you buy or sell with hard cash.

[dzug2]

As Toby says, that money doesn't exist as such.

Insofar as it went anywhere - it went to the people who sold shares when they were at a high value

[VHG]

It is a bit like house values dropping, it is not "real money".

So your house may be worth say £300,000, then the housing market takes a tumble and all of a sudden it is worth £250,000.

But the "extra" £50,000 did not exist so it is not floating around anywhere.

So the change in house price is like shares dropping, it is not real money.

[Old_Geezer]

It's a bit like this if I understand it.

Supose you have a shoe shop and sell shoes at £10 a pair. So your stock of 100 pairs is worth £1,000.

Then folk are suddenly short of cash and you can't sell any shoes at £10 a pair so you have to reduce the price you charge to £5 a pair. So your stock of 100 pairs is worth £500.

Where did the missing £500 go ? Well it didn't. The value has changed but no money went anywhere.

[Old_Geezer]

I should read other answers before posting I suppose, but why change the habit of a lifetime ?

[craft1948]

Where's that shop?

[peashaq]

If everyone on the planet were given £10,000,000 (or equivalent), how much do think a loaf of bread would cost?

[kinell]

price of bread?

as the old quote goes....

got £10M? ... eat cake then