[Just mythoughts]

Steve Schwarzman, chairman of private equity giant Blackstone, said an "almost incomprehensible" amount of cash had evaporated since the financial crisis took hold.

How does 'cash' evaporate? This is sounding like voodoo magic.

[TigerLikesRooster]

Demand collapse, supply skyrockets —> price collapse —> value of your asset plunges(even if it is not on the market.)

[AndyJackson]

How does 'cash' evaporate? This is sounding like voodoo magic.

When you hold a highly leveraged piece of paper and its value drops, your broker comes and takes away any cash you had in a margin call. Your so-called wealth just evaporated in the night like voodoo magic.

[sanchmo]

Cash did not evaporate. Wealth evaporated. Cash is physical peices of paper. Money is cash plus entries in accounting systems. Wealth is money plus a bunch of other stuff people generally agree is valuable.

Wealth “evaporated” in the sense that what we once thought was worth $10 we now find out is really worth only $6. Money “evaporated” in that all those book-keeping entries (including loans and mortgages) that were based on that wealth has been likely devalued.

You know how fractional reserve systems essentially create money when banks lend? They also create money when non-banks lend (the “shadow banking system”). The reverse is also true. Collapse in lending leads to falling money supply.