Please could you make your answers fairly simple as I’m only 15 and don’t know much about the economy.

Answer:
This is quite a simple thing. It is a combination of factors all coming together at once. First off we have the housing market in which the supply ended up far out striping the demand so that market failed and people go ousted of jobs. Second is that the banks in 1993 were encouraged to make more loans for the past 16 year. So many people who shouldn’t have received them did and lived outside of their own means. Which in result made the banks lose a ton of money when everyone was defaulting. So people got fired from their jobs left and right so the banks could make a profit. Then do to people having to try and make the interested payments on their loans they couldn’t buy things. Third is the auto industry. For years they have been doing well but had flaws such as building too many models and just going low quality. In which the foreign company’s exploited and made their products on average better so less people bought from GM, Ford, or Chrysler. Then with the combination of the two that are above people couldn’t get loans or money to buy the cars so no this industry went under. Fourth is gas prices. Since oil is essential to modern life for it’s in plastics, gas, medicine, everything. This caused prices to go up so it killed off the car industry that used high mpg cars and sucked up people money so they couldn’t buy things which shut down more buisniesse Creating a cycle of destruction. Last but not least is the finial issue. We should be in a depression but due to the government printing more money the inflation rate will go up so things will cost more then once the government is done printing they will raise taxes and we won’t be able to buy anything. Everyday this goes on the worse it will get. Just like in 1933 with the Great Depression we are repeating what happened in 1925 In layman’s terms when the business cycle is on the down turn and the government prevents the cycle from completing leading to a recession. Sorry that my answer is very long but the economy is just never one thing. It is all a complex system of answers to one conclusion. For the most part the most basic is supply and demand and do people have money.

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