Quote:
Originally Posted by Snake Doctor
The problem is in your theory that if someone loses that someone else gains. That's not true, economics is not a zero sum game.
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I guess technically you could find a winner and a loser in this situation, now that I've had a few more minutes to think about it.
The winner would be the person who bought the stock for 10% less than the person selling it paid for it. Although that person could be the big loser tomorrow, etc.
Who won when the market crashed in 1929? Were the 40% of people who were unemployed after that "imaginary"?
We're used to seeing the stock market as just numbers on a screen during the daily news report, and if you don't have money in the market it may seem theoretical to you....but those numbers represent millions of people's 401(k), IRA, pensions, and life savings.
I was trying to explain economics to my 10 year old son a few months ago, and I told him that psychology is the single most important factor. When the economy is good, people act like it's good....and they spend money, borrow money, loan money, and therefore the economy continues to be good.
When people think the economy is bad, they act like it's bad, they don't spend money, don't borrow money, don't loan money, and the economy continues to contract.
The biggest thing FDR did to get us out of the great depression was restore confidence. Once people felt like there was someone in office who was going to "do something" they started acting in a different way, and the economy started growing again.