system
Given the following post, respond as if you're commenting on Reddit:
human
Can someone please explain the economic recession that is going on in the US right now like I'm five?

Thanks in advance!
gpt
It pretty much boils down to debt and jobs.

Houses cost a lot of money--more than most people could ever afford to just save up and pay cash.  So most of the time, somebody borrows all that money from a bank so they can live in the house and pays the bank every month over 30 years or so plus interest.

The bank wants to be sure it's going to get its money back, so they ask for a lot of paperwork from the person asking for a loan so they can prove they have a good job, make enough money, and are responsible enough to pay their bills on time and will take care of the house.

But eventually, things started to fall apart.  The bank you got a loan from didn't really want to wait 30 years to get their money back, so they sold your loan to somebody else.  Your bill still has your bank's logo on it, they still handle the paperwork, but your monthly payments are now going to somebody else.

After a while, this meant that banks weren't as careful when lending money as they used to be--if you can't make your house payments, it's not their problem anymore.  They make their money off of you in the beginning, and sell off the loan.  You're someone else's problem now.

So it gets easier and easier to get a mortgage.  People go nuts, buying houses left and right.  People start to make piles of money, selling a house they bought for $100,000 five years ago to somebody for $200,000.  And then they go buy another house and figure some new paint and a bit of yardwork will make them even more money.  Heck!  Let's buy two houses!

House prices keep going up up up up up.  Banks aren't just selling mortgages to other institutions now, they're making deals on top of them too, selling "insurance" to other big bankers in case somebody stops paying their bills.

Eventually, people couldn't pay their bills, and the whole mess came tumbling down.  Banks failed, others couldn't afford to lend any more money so other businesses had to shut down because they couldn't get loans any more.  So people lose their jobs, and now even more people can't pay their bills.  Many of these people are stuck in houses they "bought" for $300,000 but it was never really worth more than $100,000.

House prices go down, down, down.

And now that so many people are broke, they can't afford to buy toys and gadgets and cars like they used to . . . so the companies making those things start to go under or have to shrink and cut more jobs . . . which makes more people broke and unable to afford stuff . . . so more jobs cut . . . on and on and on.  That's where we are right now.