ELI5. If inflation is driven partly by surplus money in the system, will big losses in stocks and crypto reduce inflation by reducing the amount of money?

Question

I keep hearing about multi-trillion dollar losses in retirement funds, investment funds, and crypto markets. If all that value is evaporating, doesn’t it increase the value of currency and reduce inflation?

In: 45

Answer 1

No.
If I give you a $500 bill for a house (or anything), then the house becomes worth $250; you are still running around waving that $500 bill.

You might even come back and make the foolish decision to buy my house for twice what it’s worth. Doesn’t matter, $500 is floating around you have a house.