If people can’t / don’t spend en masse and therefore cause businesses to collapse on a large scale, meaning they aren’t paying staff, where does all the money go?
And where do governments borrow money from?
[Edit] en masse not on mass.
In: Economics
> If people can’t / don’t spend on mass and therefore cause businesses to collapse on a large scale, meaning they aren’t paying staff, where does all the money go?
The money that a business has when it closes goes to whichever people or institutions that the business owes money to. (Anyone who has provided goods, services or money to the business, but hasn’t been repaid yet, and anyone that the business has promised money to.) Businesses have bills like anyone else. If there is any money left over after all of these creditors have been paid, then it would go to the owners. If there isn’t enough money, things that the business has that are worth money are sold, and the funds used to pay the creditors.
> And where do governments borrow money from?
Governments create bonds, which are promises to pay a certain amount of money (plus interest) at some point in the future. Investors (which can be individuals, businesses, governments or other organizations) buy these bonds, and the money goes to the government that created the bond. Note that these bonds can later be traded or sold between investors. The more confidence there is that the money will be paid back, the lower the interest rate the issuing government needs to offer.
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