It's not like the money's disappeared -- it's still out there somewhere.
That's really not true -- or at least, it's only half the story. It's true that *real* assets haven't disappeared, but *credit* has, and credit is enormously crucial to the working of the modern economy. There's a credit economy that has built up, laced through the real economy and probably at least its size.
So while yes, you can claim that the economy should in some sense keep working, the reality is that many, many businesses will crash and burn because the credit system that they have built their businesses around no longer exists. That'll hit all sectors of the economy, including many that seemingly are all about physical objects.
(The simplest example, oft-cited recently, is cars. It's lovely to claim that cars could still be made, and people would still want them. But without credit, most people simply can't buy them, so the automakers will for the most part go bankrupt. And without easy access to buying cars, many people will have to greatly change their job habits, causing huge disruptions in the practical economy...)
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Date: 2008-09-25 11:21 pm (UTC)That's really not true -- or at least, it's only half the story. It's true that *real* assets haven't disappeared, but *credit* has, and credit is enormously crucial to the working of the modern economy. There's a credit economy that has built up, laced through the real economy and probably at least its size.
So while yes, you can claim that the economy should in some sense keep working, the reality is that many, many businesses will crash and burn because the credit system that they have built their businesses around no longer exists. That'll hit all sectors of the economy, including many that seemingly are all about physical objects.
(The simplest example, oft-cited recently, is cars. It's lovely to claim that cars could still be made, and people would still want them. But without credit, most people simply can't buy them, so the automakers will for the most part go bankrupt. And without easy access to buying cars, many people will have to greatly change their job habits, causing huge disruptions in the practical economy...)