[quote=SK in CV]
You have a good point there. I didn’t really write what I was thinking. If an investor moves money from a bank account into the market by buying stock and the seller of that stock then acquired a different stock, the money supply has gone down. If the seller stays in cash, you are correct, no change to the money supply. And by trading, I meant sell Ford, buy Alcoa. [/quote]
I certainly could have missed something, but why? So I took $1 and bought a stock (say Ford) from you. That $1 went to your account, who then took the $1 you got from selling (Ford)and bought some other stock (say Alcoa) from flu. That $1 now resides in the account of flu who use to own alcoa. I own your Ford stock, you own flu’s Alcoa stock, and flu has the dollar. How did the money supply change?
The only way I know of money supply to change is for the FED to ‘print’, or banks to loan.
