A very interesting article I came across in the net , when I tried to figure out what actually happened to the billions of dollars the multinationals held , which they seemed to “lose” in a matter of days. Even the financial institutions and major banks shut down because of lack of funds .So where did this money go?
The answer was simple : There was no money in the first place ..
Here’s the article :
“It’s in people’s minds,” Shiller explains. “We’re just recording a measure of what people think the stock market is worth. What the people who are willing to trade today – who are very, very few people – are actually trading at. So we’re just extrapolating that and thinking, well, maybe that’s what everyone thinks it’s worth.”
Shiller uses the example of an appraiser who values a house at $350,000, a week after saying it was worth $400,000.
“In a sense, $50,000 just disappeared when he said that,” he said. “But it’s all in the mind.”