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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: a.handbag. who wrote (156733)9/9/2011 11:45:18 AM
From: Salt'n'Peppa  Read Replies (1) of 206092
 
I think the problem is in the concepts being thrown around.
Kayaker (and the good John Hussman Ph.D.) is both right and wrong.

Nobody (me specifically) is talking about "wiping out" or "creating" money.
I am talking about the increase or decrease in the dollar value of a share certificate, whether physically held or held in trust by your broker, which is based on "money pressure" flowing into or out of "the system".
The "$2 trillion wiped out" example refers to money pressure, not money destruction.

Think about it this way.
A share certificate that is issued at an IPO of $20 introduces $20 into the system. Two people want to buy this share (i.e. money pressure is positive), so they bid it up and a transaction occurs at $25.
$25 goes out and $25 comes in. Zero net change to the system but the shareholder sees wealth creation.
Money held on the sidelines looking to get in has represented "positive money pressure" and caused a bull market.

Conversely, if two people holding a share each want to sell but nobody is buying at the $25 they are asking, they will bid each other down until one person on the sideline finally agrees to buy a share at $15.
$15 comes in and $15 goes out. Zero net change to the system but the shareholder sees wealth destruction.
Money held in the system looking to get out has represented "negative money pressure" and caused a bear market.

It is not an easy concept to grasp.
We may be saying the same thing from a different angle. I don't know.
S&P
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