Economy Question (basic)

[mehuk]

Possibly a stupid question, however I am interested in as to how the UK (World) is facing a recession.

Basically my thoughts are:

1 – A lends $$$ from B
2 – A spends $$$ at C
3 – A fails to pay back $$$ to B

Results are that C comes out on top, with B having a loss and A getting bad credit.

So the money that has been lent out by companies is still around in the economy somewhere, just possibly not where C’ would want it to be….

Does that make sense?

Obviously things are on a grander scale, but my point of that all the lost money by the banks, must be someone else’s gain – or do banks deal in ‘virtual’ money in that, funds do not actually move accounts, just the premise of money is there?

As mentioned probably stupid and im missing something blatantly obvious, but I don’t see how all these ‘billions’ can just disappear from the economy??

 

[mehuk]

thats what i dont get - why is now my £1000 box worth just £10 if nothing has happened to it

who is making this decision and why are they making this decision?

surely its in everyones interest, to not make the decision that my box is now worth £10

 

[mehuk]

so companies lying, makes the value of things fall?

to indepth for me, but im sure people are being screwed over by idiots 'higher' up

 

[mehuk]

got it

so things boomed become 'supply' of mortgages were plentiful, companies saw money to be made etc etc

people failing to pay back their mortgage/loans etc - are the problem? so they property that they had purchased with these mortgages/loans do not cover the value of what is loaned out.

hmmm - makes sense, but to make everyday person pay for what is essentially stupidity at a banking level is a disgrace.

let banks go bust - other companies do, so screw them too