What I don't understand is: WHERE DID ALL THAT MONEY GO?

[quaker bill]

13. It never existed

to a large extent the "money" was inflated asset values for paper that had literally nothing to back it up. Somebody somewhere noticed the emperor had no clothes. The "money" simply evaporated.

For a very brief moment my house probably had an inflated asset value a bit more than 3.5X what I paid for it. If I had sold it and sat on the cash for a bit, I would be sitting pretty at the moment. I didn't and now the house is worth only 1.5X what I paid for it, the rest simply evaporated, it was "value" that never truly existed. Had I sold it, the new mortage would have been securitized, packaged into a CDS, and all that fake "value" would simply have disappeared, just the same. The difference is that I would have had the cash.

People who sold assets into the bubble realized some of the fake gains. Folks who traded in fake assets realized most of the losses. The fake assets had a life of their own and became momentarily "worth" multiples of their faux value. The "money" disappeared because some folks noticed that it never really existed.