Everybody knows about how the stock market has crashed all around the world. This caused everything else to plummet. People are losing their jobs and money. Everywhere, everybody is effected, even people who you thought possibly wouldn’t be effected. But, I have a question. Where does all the money go?

What happens is that since the stock market isn’t an actual exchange of money, so when the stocks go down, the money literally disappears. Almost literally vanishes in thin air. Here is a quote from a Web site that I think really explains this situation well. It’s a long quote ) but it really describes this topic.

“The error in your question results from thinking of money as something real, rather than as an abstraction-a symbol. Money seems ‘real’ because we use it as a taken-for-granted medium of exchange in daily transactions. We use money because, well, everyone does, and we know it ‘works’ to make these transactions. But money is simply a system of accounting for trades. To the extent that it measures anything, it does so because we believe that it does. This is known as reification-the process of converting a symbol into a ‘real thing,’ of thinking of an abstract concept (money, in this case) as an actual object or material force. ‘Money’ is not the material representation of ‘dollars’ or ‘change’ you carry around with you. It is an ‘idea,’ a concept that is based on nothing other than our faith in (a) its usefulness in procuring what we want-i.e., making us ‘free’ in the sense of excusing us from obligations or obtaining things we think we want-and (b) its capacity to measure the ‘value’ of the things we think we ‘own.’ When we lose faith in those functions, money ceases to exist. Hence, the money we invest in stocks disappears when the stock loses value.”

Source: http://academic-regis-edu/iroth/MoneyOA20and%2OValue.html