Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down. Margin calls happen and increase seller volume, prices go down further. And so on.

I'm not saying all this will happen. Just that capital doesn't have to "go" anywhere for a crash to occur.

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refurb 12 hours ago | parent [-]

> Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down.

So the law of supply and demand just magically reverses itself?

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PeterHolzwarth 12 hours ago | parent | next [-]

People, or organizations, but mainly people, can just refuse to invest in stuff, parking their money in low-interest bank accounts, or the old style "stuffed into mattresses."

This was the multi-decade problem Japan ran into after its hot economy imploded, and unleashed the "lost decade" (which became decades). It was not a marginal issue, and for year the Japanese government tried everything it could think of to get people to invest in things - to little effect.

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simpsond 12 hours ago | parent | prev | next [-]

Market cap doesn’t equal liquidity. If everyone wants out of an asset, and no one wants it, supply exceeds demand and the price crashes.

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triceratops 12 hours ago | parent | prev [-]

No idea what you're talking about. Explain.

	▲	refurb 8 hours ago \| parent [-]
		Statement: if AI crashes where will the capital go? Claim: people will just choose to not invest capital at all Response: that’s the opposite of what we know about supply/demand. When a supply of something (desirable investments), goes down, with demand steady, prices go up It’s the same thing that happened during zero interest rate environment - huge supply of capital, few places to put it, so it piled into tech which drove up prices So I guess my answer to “where will the capital go?” is “the next best thing” which drive up prices of that thing