I understand that this would never happen and probably (due to large amounts of non-cash wealth) never even could happen, [b]BUT[/b], what if? .... .... Bill Gates literally cashed in his entire net worth and burned it. Billions upon billions of greenbacks totally lost.
What would happen to our economy? good things or bad?
If Bill Gates were to cash out - there would have to be a deal between a willing buyer and a willing seller ( the definition of an equitable trade). I think Gates' net worth is around 40-80 billion dollars.
It would amount to less than a bump in the road, given our multi-trillion dollar economy.
So - nothing much at all would happen - except the price of Microsoft stock would probably double.
The first problem is if Bill Gates is even allowed to sell all his shares. He might be restricted, i.e., they might be outstanding but not part of the float.
Now, assuming his shares are NOT restricted:
True. Unless, of course, people interpreted it as a sign of bad things to come and started dumping stock of other companies.
I'm not sure if you made a typo -- if you didn't, you really need to read up some -- but actually Microsoft shares would first plummet (due to the major stock dump). Every individual share that Bill sold would be worth less than the previous one, and the stock would probably go down in flames. Of course, this could be followed by a strong buy-back and some lucky fellows could make a lot of money riding an up-surge.
Alternatively, the company could buy the shares back directly from Bill at an agreed price and take them away from the pool of outstanding shares -- that could potentially avoid all the dumping and actually increase the value of the stock a little bit (it wouldn't double because the cost to the company's bottom line would be enormous).