> Creative destruction is brutal math. The capital? Gone. Completely vaporized. But infrastructure isn’t stock certificates. Those fiber optic cables didn’t vanish when Pets.com did.

I read quotes like this and reminded that it is common that people forget money is just a competitive resource we use to outbid each other for _real_ things. Money moves around, it isn't lost or "Completely vaporized", someone receives it at the other side of the transaction. It is still in circulation, it can still be used to outbid people for real things, just by different people.

Also, pets.com still exists, it just forwards to petsmart.com.

Money can be "lost", and "created". In fact, it regularly is by commercial banks; this is the cornerstone of the modern economy. The bank of England wrote a pretty accessible document on money being created and destroyed [1]. For a slightly deeper dive (but equally accessible) check out "Can’t We Just Print More Money?" by Rupal Patel, et al. [2] which describes the different kinds of money.

The 2014 doc was a pretty wild read for me when it came out - it changed my perspective quite a bit.

[1]:https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

[2]: https://www.goodreads.com/book/show/58796370-can-t-we-just-p...

> money is just a competitive resource we use to outbid each other for _real_ things

That's true, but the thing that's lost is the economic/productive capacity that the money was spent on, that could have been used for other (better) purposes.

For example, if I raise $100mn in a frothy market, and spend it on employing 100 Engineers on $1mn/yr salaries for 1 year before ultimately going bankrupt, it's true that the money doesn't disappear, as it was simply transferred from the VCs to the Engineers, but what's spent/consumed is the Engineers' time. Society can never get those 100 person-years back, and the VCs have to write their capital investment to 0.

The other comments are separately true - money is created by bank borrowing and destroyed by loans being repaid or going bad. Periods of speculation often result in increasing leverage (e.g. borrowing to buy stocks/houses), which does result in the destruction of money when it unwinds (as well as damage to bank's balance sheets, which can become problematic when it happens at a large enough scale - see 2008).

A stock price decreasing essentially "vaporizes" the wealth of owners, that is not a straightforward transfer. Stocks aren't cash.

"capital" in the economic sense isn't money at all - it's tools, infrastructure, knowledge; from this point of view, you're correct. A bubble bursting on the stock market doesn't destroy capital.

On the other hand, the monetary value of the stock market (and other assets) going up and down does create or destroy "money". From a financial point of view, it's not a zero sum game.

Well, you need to pay taxes on each step.

This is incorrect. https://en.wikipedia.org/wiki/Money_creation . A bubble bursting is the inverse process of money creation. Money isn't paper bills or metal coins. It is mostly numbers in a computer.