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Old 07-24-2007, 02:09 PM
Evan Evan is offline
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Join Date: Jun 2004
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Default Re: Collapse of the American Economy?

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I'm going to use this doomsday hooplah to try and further understand things in general. So let's say you buy a stock for $X. Now doomsday happens and $1 = $0.10. It seems like the company would now be charging 10 times as much for it's product and making 10 times as much so if you sell the stock it would be worth around $X*10 and you'd break even on the deal as far as your purchasing power is concerned. It seems like I'm missing something big, but I'm not sure what it is. Explain/flame away.

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Just because money is worth x/10 doesn't mean everyone automatically has 10x as much of it. Therefore, even if they do successfully charge 10x their original product price, they won't be able to sell as much of it simply for the fact that it's going to constitute a larger portion of people's wealth.

It gets more complicated, of course, but that is why things don't just jump into a new equilibrium.
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