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
The federal government puts more money into the economy by allowing banks to lend more out. In other words a number is changed in an account, and banks lend it out. Where did it come from? It was created out of whole cloth. The treasury can remove money from the economy by destroying old currency previously in circulation. Money is a fiction, a concept, and idea societies have confidence in. When we lose confidence, money becomes worthless. That’s how currencies collapse.
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