How is money lost? After the 2008 crisis, it was said that the world lost trillions of dollars. But since money (wealth) cannot be created or destroyed, only transferred, then where did all the money go?

Currently how much currency do you have in your pocket? Is that your total worth? Not really. You might have an education and job, that is worth wealth. In fact, banks might be willing to loan you money because they think the education and employment is of value. You might have good health that is of value. Shane Warne once insured his finger. And you might own a home and is of a huge value. Currency is a small fraction of global wealth.

I run a startup. If I could crack a couple of big challenges in Robotics and can find more customers, the value of my startup and my wealth would go up substantially. If there were a lawsuit or an open source project that replicates our algorithms, my wealth would go down.

If you were a body builder and found that you have a muscular disease that might waste away your muscles in the next few months, your sponsors would vanish. Even if your muscles today look fine.

Most of world’s wealth is locked in our expectation of future benefits. Investors invest in Ola not because it is profitable today. That is how world’s assets are. If our predictions for the future change and so would the value of the assets.

If the land you own now is going to be used by the government to build a major city, you will become a rich person. If on the other hand you find that there is a toxic waste dump coming nearby that value of land will go down and no one would still buy it. You will become poor.

Wealth is created and destroyed based on the future predictions and expectations.