I think wealth can evaporate. If, say, you buy 10 shares of a stock at 100 and it goes to 200, you have "made" $1000.

If it drops to 100 again, you have "lost" $1000 without anyone making a dime. That "wealth" is gone. The problem is that for loans and other financial considerations, that initial $1000 gain was treated as real rather than "weather wealth", subject to change at any time.

Same with house prices. With money in short supply a house for which someone would gladly pay $500,000 may have a tough time getting sold for $300,000. No one profited from that drop in value.

I realize there are short sales, commissions and smaller considerations but the principle is the same.

Arf