Money and value, two totally different things.
You have $100,000 in cash in a pile and in ten years you look at that pile, still $100,000. Cold hard cash. Still same amount still same worth.
You have a house, worth $250000. It is not cash, it is valued at that amount based on what is apraised value. Of which, that value is based on what other houses in your area sale for, what the market rate is, etc. So, as long as other houses in your area sale for an amount that keeps up with your value, you still have $250000 value in your home. Now, your neighbor three doors down losses his job, can not afford his home. He does not want to foreclose, so he goes to his bank and says he wants to do something else. They do a short sale, which is when they sale it below value and take a less loss (Banks take no real loss). It sales for $120000. That then affects the appraisal value of all houses in your area, as a house closed on a sale at $120000. So now, without you doing anything, your house value is $180000. $70000 in net worth, just left the local economy. One street over, a woman losses her job and has to move. Her house is not worth $60000 less then she owes, so she knows she can not sale it, so she moves to another city and buys a new home and lets the old one foreclose. The bank takes it, and does not want to hold on to it long. So they sale it for $80000 at auction. Now, your house is worth $125000. Yet you have not nothing, just sitting there and making your payment. So within say, six months, your house is now $125,000 less then it was before. 50% of net worth in the world is missing, that quickly. Doubt me, check your value on zillow.com. Might need some tissues for your tears.
Next topic, stocks. You buy stock at shares worth $100 in a company that is just kicking ass with profits. This company is called Lender Source LTD and they can do no wrong. You by $1000000 in shares. It doubles in value as the housing industry booms, now you have $2000000 worth of wealth. However, it is in stocks and based on value. Unless you sale right now, no cash in the bank, but with this kind of stock and with this growth. Hang on! Over night, the housing industry slides, you wake to your stock now being $850000. Yes, it dropped and you should sale, but it is now worth less then you put in. So you hold on and watch it go down, down, down, and soon it is worth $250000. It was never a pile of cash though, it was a value in stocks, and the value shunk based on an economic turn. Your wealth dropped without you doing anything. Wealth in the world dropped too, when you times what you did by all the investors.
I guess what my point is. Is that people see money or wealth in the world by that pile of cash I mentioned, and not by the examples of property and stock worth. Which is really just numbers and no printed money to back it up. So basically, no government or person went out and grabbed cash and threw it away. In fact, some countries printed more, which lowers value and that is another topic all together. Either way, it was value that disappeared and not cash. So if you see it that way, it makes more sense.
