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> Because there is the same amount of money bidding on fewer things. But the reason there are fewer things is because producers are responding to less demand f
by jallen_dot_dev 5y ago
> Because there is the same amount of money bidding on fewer things.
But the reason there are fewer things is because producers are responding to less demand for things. It's not like a recession just knocks out production leaving demand untouched, causing the price to move along the demand/supply curve. You won't have the same amount of money as before being bid on the fewer things.
- TekMol 5y agoSo consumption goes down and savings go up? Wouldn't those savings go into the stock market, making stocks more expensive?
- jallen_dot_dev 5y agoNo, consumption goes down and savings go down too. One person's spending is another's earnings (which impact savings). The money supply isn't fixed and the amount that money changes hands certainly isn't fixed either.