How can a recession see a drop in profits and a rise in poverty? Where does all the money go, if not to the businesses or people?
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Another issue to think about in relation to the money question is that largely, most of the world’s wealth doesn’t actually exist as money.
It exists as debts or loans owed to someone else, which aren’t liquid wealth. Liquid being a reference to a liquid being able to take the shape of its container, I.e. a form of wealth that can be easily transformed such as currency. Most investments like stocks or gold bullion are only partially liquid, in that they have to be sold first and are difficult to directly trade with. Things like real estate or lending are even less liquid, as their value is usually tied up in contracts that can’t be easily traded for monetary value.
So in addition to there being less stuff in demand, there’s usually less liquid money being spent
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