3 ms·

Doesn't the stock market create (and in the inverse, destroy) money? If Apple goes from $13/share to $700+/share, those hundreds of billions of dollars are bas

by steven2012 11y ago

Doesn't the stock market create (and in the inverse, destroy) money? If Apple goes from $13/share to $700+/share, those hundreds of billions of dollars are basically created from thin air, aren't they?

deleted 11y ago
[deleted]
casus 11y ago
No. The share price is the latest price someone purchased that share for. It's just a metric. Someone did literally spend $700 and gave it to someone else in exchange for one "share". Now, you may call a "share" just a piece of air--but it is something that has value. The money for it, however, comes out of my pocket and is definitely not thin air.
- stefantalpalaru 11y ago
  What if you skip selling the shares for money and you use them directly to buy something? I'm pretty sure you can buy other companies with a partial payment in shares and you can hire people doing the same, so the share acts like currency in some scenarios.
arawde 11y ago
No. Stock prices represent the markets approximation of the value of a share in the company, and its potential for future growth. Stocks can (sort of) be thought of as currency which represents companies rather than a government's reserve systems. A US dollar is worth $1 because you and the person you are giving it to expect it to be worth $1 (roughly) tomorrow. When you move stocks, it's a similar agreement on the value of what is being moved. Of course, with stocks you have a much larger ability to measure your trust.
arthurcolle 11y ago
No. The stock market represents equity, i.e. ownership, in corporations.
joshu 11y ago
If the price tags on a bunch of clothing are doubled, did the store create money out of thin air?
- deleted 11y ago
  [deleted]
tim333 11y ago
It can increase the amount of money in circulation. If you sell your Apple share for $700 to someone who had that sitting in their savings account then you can go spend it whereas the money might have just sat there otherwise.

deleted 11y ago

[deleted]

casus 11y ago

No. The share price is the latest price someone purchased that share for. It's just a metric. Someone did literally spend $700 and gave it to someone else in exchange for one "share". Now, you may call a "share" just a piece of air--but it is something that has value. The money for it, however, comes out of my pocket and is definitely not thin air.

stefantalpalaru 11y ago
What if you skip selling the shares for money and you use them directly to buy something? I'm pretty sure you can buy other companies with a partial payment in shares and you can hire people doing the same, so the share acts like currency in some scenarios.

arawde 11y ago

No. Stock prices represent the markets approximation of the value of a share in the company, and its potential for future growth. Stocks can (sort of) be thought of as currency which represents companies rather than a government's reserve systems. A US dollar is worth $1 because you and the person you are giving it to expect it to be worth $1 (roughly) tomorrow. When you move stocks, it's a similar agreement on the value of what is being moved. Of course, with stocks you have a much larger ability to measure your trust.

arthurcolle 11y ago

No. The stock market represents equity, i.e. ownership, in corporations.

joshu 11y ago

If the price tags on a bunch of clothing are doubled, did the store create money out of thin air?

deleted 11y ago
[deleted]

tim333 11y ago

It can increase the amount of money in circulation. If you sell your Apple share for $700 to someone who had that sitting in their savings account then you can go spend it whereas the money might have just sat there otherwise.