Especially as of late – it was going “bad” with the economy and interest rates were rising. How come we see so many stocks with an “All time high”? I’m not looking for a psychological explanation, but literally: where do the coins come from to purchase?
In: Economics
The various governments of the world are responsible for regulating their own money supply. They have the power to create units of currency out of thin air if they so desire. Ultimately all currency which exists has been issued through such means.
However it is important to understand that money is not a one-way flow. It isn’t created and consumed like some kind of video game resource. When shares are bought by someone the money passes from one person to another; the price of stocks going up doesn’t require the money supply to expand to keep up, the size of the purchase can just increase because the amount of money that exists before a purchase and after a purchase is the same.
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