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

People are saying not, but it will, IMO. Many people were taking the money out of the market or refiing their house, or even selling high and then using this money to fund other things, like buying another expensive house, remodels, new cars, trips, . . . . When the market is down or houses fall 30%, this will reduce the money flow and people will cut back. I already see it in business. I personally know several people who have refied and taken money out for remodels, to buy another property, or get a fancy car. I have lost a shit ton of money (retirement and non-retirement accounts) and wife and I are cutting back on spending because our retirement and kids college are off track. Answer from economists or based on theory don’t reflect the real world.