Imagine if you woke up tomorrow and checked your
wallet and found that it was empty of cash. You check your jar of
loose change and it's empty as well. You call your
bank and they inform you your bank balance is 0. You call your
stock broker and they tell you you have no shares in anything. You panic. You call up your
family, hoping to borrow some money and they tell you they're broke too.
In fact, all the money, stocks, bonds, and gold bars sitting in bank vaults have disappeared. For everyone. Sounds like the beginning of a science-fiction disaster movie, right?
The fact is, even with all these things gone, food can still be grown, houses can still be built, and life can go on. All the natural resources and productive equipment are still there. All the workers are still around.
All these financial instruments are just a way of accounting, a convoluted way to decide how various resources (from raw materials, to factories, to labor) is used to produce the things everyone uses.
Now imagine all the money, stocks, etc came back, but you are in the midst of an economic depression. Raw materials and factories sit there unused. People stay at home because they have no jobs. Meanwhile, people are dying because of lack of nutrition, warmth, and health care.
What's wrong with this picture? If there's no need, then fine, people can do nothing. But if there is need, why are economic resources sitting idle and not being used to fill that need? Unemployment is a measure of how much of our human resources are being wasted. If an economic system can't find a way to make use of all the potential resources it has, then it is the wrong economic system.