Comment by triceratops
7 hours ago
Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down. Margin calls happen and increase seller volume, prices go down further. And so on.
I'm not saying all this will happen. Just that capital doesn't have to "go" anywhere for a crash to occur.
> Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down.
So the law of supply and demand just magically reverses itself?
People, or organizations, but mainly people, can just refuse to invest in stuff, parking their money in low-interest bank accounts, or the old style "stuffed into mattresses."
This was the multi-decade problem Japan ran into after its hot economy imploded, and unleashed the "lost decade" (which became decades). It was not a marginal issue, and for year the Japanese government tried everything it could think of to get people to invest in things - to little effect.
Market cap doesn’t equal liquidity. If everyone wants out of an asset, and no one wants it, supply exceeds demand and the price crashes.
No idea what you're talking about. Explain.