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From books

When people get scared and suddenly stop spending, the economy can get stuck at a low level, and the government can help by spending itself.

In the absence of private spending, public spending can break the spiral of recession.

If all your neighbors suddenly decide to stop buying anything, shops sell less and lay people off. Those people then spend even less. Keynes showed that at such moments, the government can break this cycle by paying for roads or schools, putting money back into people's pockets.

Keynes noticed that in a panic, people not only stop spending but hoard cash under the mattress. You buy less bread, but also fewer clothes. The clothing factory lays off workers, who then buy no bread either. The state can break this deadlock by spending on simple projects, like fixing a bridge. The money reaches workers, who buy bread and clothes again. The next step shows how this spending multiplies through the economy.

Why it matters Governments used exactly this idea during the 2008 and 2020 economic crises.

Panic &SavingsLow SalesUnemployment& LowEven LessSpending
Vicious cycle of recession.

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