Please help me understand this basic concept
When a natural disaster occurs and wreaks havoc on the economy, I get that. When we owe another country a lot of money, and they collect it, and we suffer as a country, I get that. I get why war can ruin an economy, and why scarce resources can ruin an economy.
However, how can there be a GLOBAL recession based off of nothing but leverage? If there was no oil left in the world I could see how that could ruin the global economy. But when banks start collapsing and the system becomes deleveraged, why do people starve and why do people get laid off? There is still the same amount of food and houses and peopel and steel and cars and boats and planes and computers in the world, so why do people stop building, or shipping, and how do people not afford food? Shouldn't financial disaster be zero-sum? If your bank collapses, you lose, and the bank had gained by using it all up in the mean time. Or if your stock tanks, the longs lose and the shorts win.
Everybody discusses money in the abstract, forgetting that the collaterall of money is stuff.
How can there be a globl recession caused by something that is abstract as money and having nothing to do with the actual stuff?