In a nutshell...what caused the economy to be like this?

[holaback]

The world has stayed afloat from the buy, sell, trade for countless years and as long as we keep doing what we are doing we stay afloat. Where the hell is all the money going!?

[racketboy]

In a nutshell: it's caused by people making stupid decisions and/or trying to game the system.


And it's not just in one place....
You have all the execs and financial people gaming the system to make their companies look better than they are
You have banks convincing people to buy a home, car, whatever that they can't afford
You have real estate people that have told people that real estate is a sure-fire way to make quick and easy money

It's just now all coming back to bite everyone.

[Flak Beard]

Not to mention, outsourcing.

Who needs to employ US citizens at normal wages to assemble products, when you can get children in Indonesia to do it for pennies a day?

That's one huge problem. Were buying consumer products but it's not creating jobs, just endless bank rolls for corporate execs.

[corn619]

Blame it all on piracy.

[Niode]

Mostly people lending money they can't possibly pay back. Also 100% mortgages on homes has had a lot of impact.

[Hatta]

Insufficient regulatory oversight. Blind devotion to the idea that markets are self regulating, and that people are idealized purely rational self-interested beings.

"Where is all the money going?" is the wrong question. "Where did all that money come from" is better. Most of the money that was lost, never really existed in the first place. If Alice put $100 in the bank, the bank can go ahead and lend $90 out to Bob. Our economic system treats that as $90 being magically conjured out of nothing. But it's obviously not all real money. When Alice and Bob both decide to pull the money out of their accounts, the bank won't have enough actual cash to cover it.

To me, this seems like an extremely silly way of doing things. Our economy should not run on debt.

[MrPopo]

You remember those late night infomercials where the guy would tell you all the secrets to making money without working, or buying things you normally wouldn't be able to afford thanks to loopholes?

Well, when enough people start doing it the system collapses. And that's what's happened here.

[johnblade]

That kinda sum up almost everything a bit.

[Ack]

What they said.

Also, the crippling effects come when industries begin to collapse one by one.

[marurun]

If it was truly possible to sum up the current economic state of affairs in a nutshell, it would probably be a lot easier to fix. The mess we're in is complicated, unnecessarily so, and it'll take us a while to get out. Please note that as many people as possible will try their damnedest to learn as little as possible coming out of this so it will take vigilance to ensure any fixes actually stick.