It vice versa where’s it coming from when the economy is booming?
When the economy is bad, it feels like there’s not enough money to go around, but when it’s good there’s plenty.
In: Economics
For common people, it gets hoarded. People hold onto their money and don’t spend it. Which in turn means businesses make less money and often increase prices to compensate and/or let staff go to stay profitable. Which means people lose jobs and can’t afford to buy things, which means less money back to businesses and it repeats.
There is a whole load of complicated things to do with businesses with changing interest rates and such that can have an impact too, but that’s beyond ELI5: The true answer really is:
The money doesn’t go anywhere, it just gets spread around less.
Less being spent, less wages being paid, less loans being paid off, more defaulting, more unemployment, in a big vicious circle until something breaks.
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