[quote=walterwhite]Also stocks can and do go to zero. Isn’t money destroyed then? What if things get so bad that starts happening a lot[/quote]
No!
If you own a stock that was worth something and the next day it is worth nothing, all that means is that YOUR ability to exchange that stock for someone else’s money just disappeared. It had absolutely no effect on the supply of money.
People, money is not a concept, and it’s not a feeling. Money is a specific, measurable thing. It is the societally accepted medium of exchange that is immediately redeemable at par value to use as such a medium. Stocks aren’t money; they are just claims on ownership of a business. The value of those claims changing does not, by itself, directly affect the amount of money in the economy. Houses are not money. They are places to live. Changes in their value can (as I have acknowledged many times) affect one mechanism of new money creation (home loans), but changes in home values DO NOT directly change the supply of money in the economy.
