If all the money in the U.S. only totals $6 trillion how can the New York Stock Exchange have stocks valued at $15 trillion?

Let's start by understanding whatglobal market capitalizationmeans. We'll go back to a 1999 example. On the New York Stock Exchange (NYSE), as of October 1999 there were 3,066 companies listed. One of them wasIBM．类网站this onewould tell you that IBM had 1,809,090,000 outstanding shares on October 21, 1999, andthis pagewould tell you that the stock closed at $91 on October 21, 1999. That means that IBM's totalcapitalizationwas:

In other words, if all the shares of IBM were bought by someone for $91 per share, the person would have to pay $164 billion to buy IBM. If you perform that calculation across all 3,066 companies on the NYSE and add them all up, you get a total capitalization of$15 trillion．

The difference between the$6 trillionin the M3 money supplyand the $15 trillion on the NYSE is that the $6 trillion areactual dollars, while the $15 trillion are allon paper．For example, on October 20, 1999, IBM closed at $107 per share, while on October 21, 1999, the number was $91 per share. The stock's price fell $16 in one day. On that day, 69,444,800 shares traded hands (about 3.8% of the total available shares). In terms of capitalization, IBM's shares lost:

On paper, $28 billion evaporated in one day. However, the vast majority of shares (96.2%) did not trade hands. All of those shareholders who did not trade their shares lost money only on paper, not in reality. If the stock bounced back to $107 the following day, then on paper they'd have lost nothing at all.

What this shows is that there is a difference betweencashandvalue．There is a limited amount of cash, but there are many different things that have value to people -- cars, boats, houses, buildings, gold, land, books, roads, stocks and so on. These things all have value. In order to transfer ownership, we use cash to represent the value. Cash is the universal representation of value. If we didn't have cash, we would have to exchange objects of equal value whenever we wanted to buy something. That's calledbartering, and it's generally an inconvenient means of purchase. As a society, we agree to use the limited quantity of cash as a universal object of value in our transactions because it makes transactions a lot easier.