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Comment on $1.8 trillion was wiped out from the US stock market yesterday, where did it go?

To be fair the very idea of value of money is “imaginary”. Even a bank note is nothing more than a promise.

The value of a stock is derived from the trust that someone will trade you for it. If the trust goes away, so does the value.

Similarly, the value of a bank note is derived from the trust that someone will trade you for it. If the trust in a bank (bank run) or government (scarce money supply, solvency) or economy goes away, so too will the value of money, i.e. inflation.

Even comodities and tangible goods have “imaginary” value, because these things can be under or over produced.

That being said, the degree of imagination needed to trust the value of trade varies, and stocks are definitely close to the top of the imagination tree.

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svtdragon@lemmy.world ⁨8⁩ ⁨hours⁩ ago
A good currency serves two purposes: a good medium of exchange (easy to transact, easy to find someone willing to accept it in exchange for goods and services) and a stable store of value (worth ~the same yesterday as today). They are distinct purposes.

You’re describing the former (finding someone to trade with) but actually talking about the latter in your point about “imaginary value” of money (as distinct from stocks). So I’d offer a small addendum about the value of money being imaginary: the guarantor of a currency plays a huge role in making the value real, in the sense that they are obligated to accept it when you use it to pay taxes.

Likewise commodities like gold are a somewhat stable store of value (disregarding supply shocks for the moment) in the sense that if everything goes to shit you can use them to make shiny baubles (or semiconductors).

Notably this is not the case for stocks, which is why stocks aren’t a good currency.

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dihutenosa@piefed.social ⁨1⁩ ⁨day⁩ ago
The difference with stock being that if you have 1T monies, you can buy stuff worth 1T (after ice cream cones run out, buy a factory or switch to candy). With 1T of stock, you can’t.

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- Semjeza@fedinsfw.app ⁨13⁩ ⁨hours⁩ ago
  No, but you can take a 2T loan using the 1T stock as collateral, and buy more things with the promise you buy it back.
  
  And you can even use the 2T loan to buy out competitors or otherwise invest in that 1T of stocks. And when it’s worth 2T borrow 5T to pay off the loan and have 3T to invest.
  
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