How would you explain the Global economic crisis to an 8 year old?

Our economy goes in cycles, because humans are usually pretty optimistic. When things are going well, and our investments are working and everything is humming along nicely, people try to figure out ways to make even more money. For a while it works, but eventually it always fails and when it does, we have to adjust back to a place where it's harder to make money for a while. Then things improve gradually, and the cycle repeats itself. The trick is to learn from the wisest people who have lived through many of these cycles. They generally advise you to use moderation in all of your efforts. Have several different ways to make money, invest a little in many different things, spend less money than you make, etc.

Everyone borrowed so much money, they all ended up owing each other more than they could pay back so now nobody trusts anyone any more. So now nobody will loan anyone any more money but everyone needs to keep borrowing so they can continue to try to pay back what they owe.

Kind of like not being able to build because you ran out of inches.

Why do you want to put that nasty subject on an 8 year old.

It would go like this: " Look little Tommy, your Mommy and Daddy were stupid and spent waaaay more than they can ever pay back because we were greedy and wanted to show off for our friends. Now you and your friends get to work to repay all this debt long after we are gone" ....how's that????!?!!? LOL

Tell the 8 year old, everyone is becoming very poor.

explain money as a bag of candy,

when people make more bags there is less candy to go in each so they are worth less.

the united states is making a whole bunch of bags, but we still have the same amount of candy to go in them.

you can probably take it from there

Explain that there is not enough money for you to buy things you want, you can only buy things you need, like food to live.

Sometimes these things happen but it always gets better.