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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Money is valuable because of what it can buy. You are paid according to how valuable you are to the economy, and a banana is priced according to how much people wanna eat it. Money itself is used as something to trade for what you want.
In a recession, money isn’t worth so much. That means you need more of it to buy what you want. This is called the inflation, and prices go up. Usually your wages don’t go up so fast, unless you’re really good at negotiating. The reason for inflation is complicated, but basically it happens when there’s not enough stuff for everyone who wants to buy it with the money they’ve got.
The job of government is to be careful with how much money to create (mostly by promising to bail out lenders, but also through useful public works and services like schools, hospitals, and roads), without making so much money that inflation happens.
Recently, theres lots of reasons why there’s not as much stuff around, including the fact that people weren’t building too much the last couple years, and also it got harder to ship things from around the world.
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