Everybody says they lost money in the Finacial crisis so where did the money go?

  1. heohongtham profile image63
    heohongthamposted 7 years ago

    Everybody says they lost money in the Finacial crisis so where did the money go? And who got it?????

  2. ledefensetech profile image71
    ledefensetechposted 7 years ago

    The money disappeared.  What happened, in a nutshell is this.  People invested in unproven investments.  They thought those investments would increase in value forever. Since they thought that, they were willing to pay prices that had no basis in fact.  When people realized those "assets" were worthless, they lost not only the money they paid for those "assets" but also the "value" they thought those assets would sell for.

    One thing you use "assets" for is to determine your net worth and you can use your "assets" to secure loans and credit.  When those "assets" were shown to be worthless, those loans and credit had nothing to back them.  Also since the person with the worthless "asset" was now in a financial hole, they defaulted on those loans and credit, which then rippled across the economy because it's an economy based not on savings and investment, but one based on debt.  So the losses snowballed and became larger and larger.  In essence that money disappeared because it wasn't real in the first place.  The only real money is gold.

 
working