Early 1980s recession in the United States
Okay kiddo, so in the early 1980s, the United States had some trouble with money. When people don't have a lot of money, they can't buy as much stuff, and that means companies can't sell as much stuff. When companies can't sell as much, they don't make as much money, and sometimes they have to lay off (which means fire) some of their workers.
This happened to a lot of people in the early 1980s, and it made things really hard for them. They couldn't pay for things like their houses or food or clothes. This made even more companies unhappy because they still didn't have anyone to buy their things. People call this a "recession" when it happens to a whole bunch of companies in a whole bunch of places.
To try and help fix this problem, the government did a few things. One of the things they did was lower the amount of money they were putting into the economy. This meant that people couldn't borrow (which means get money from someone else that they have to pay back later) as easily. But this also meant that people couldn't spend as much money, and that made things even harder for the companies.
Another thing the government did was raise interest rates. When people borrow money, they have to pay back extra money called "interest." So if someone borrows $10 from you and agrees to pay you $11 later, that extra $1 is the interest. When the government raised interest rates, it made it even harder for people to borrow money because they would have to pay back more than they did before.
So basically, the early 1980s recession happened because people didn't have a lot of money and couldn't buy things, which made companies unhappy because they couldn't sell things. And then the government did some things to try and help fix the problem, but those things made it even harder for people and companies to get money.
This happened to a lot of people in the early 1980s, and it made things really hard for them. They couldn't pay for things like their houses or food or clothes. This made even more companies unhappy because they still didn't have anyone to buy their things. People call this a "recession" when it happens to a whole bunch of companies in a whole bunch of places.
To try and help fix this problem, the government did a few things. One of the things they did was lower the amount of money they were putting into the economy. This meant that people couldn't borrow (which means get money from someone else that they have to pay back later) as easily. But this also meant that people couldn't spend as much money, and that made things even harder for the companies.
Another thing the government did was raise interest rates. When people borrow money, they have to pay back extra money called "interest." So if someone borrows $10 from you and agrees to pay you $11 later, that extra $1 is the interest. When the government raised interest rates, it made it even harder for people to borrow money because they would have to pay back more than they did before.
So basically, the early 1980s recession happened because people didn't have a lot of money and couldn't buy things, which made companies unhappy because they couldn't sell things. And then the government did some things to try and help fix the problem, but those things made it even harder for people and companies to get money.