Question regarding ranked reset:

Apparently, EVERYONE gets placed lower after placements. This is because Riot drops everyone's mmr on the "soft" reset. My question is this:

Since MMR ranks you relative to other players, if you just throw a flat reduction on everyone, won't everyone just have a lower MMR? If I had plat MMR last season, and now I have silver MMR, but everyone else who was in plat has silver MMR too, won't we all just sit here in silver? Isn't the only way out of this that the challenger players are going to beat pretty much everyone else all the time until they set themselves apart in challenger, and then MMR increases will sort of "trickle down" from them once they reach a high enough MMR?

Am I wrong about something or missing something?