What happened there, please tell me they turned really shit?
It's hard to translate between baseball and football (and American and non-American leagues), but more or less (as an example):
The Red Sox had one of the best players in the league, Mookie Betts. They drafted him in 2011, he had been with the Red Sox since 2014, he won the Most Valuable Player award in 2018 when the Red Sox won the title. He just turned 27 a month ago, so another 5-6 years of prime age for baseball. He's not a hometown guy but he'd been with the Red Sox organization his who professional career.
Prior to this season (and COVID) in February 2020, the Red Sox traded him to another team competing for the title (Los Angeles Dodgers) because he was due a new contract and they didn't want to pay it. The Red Sox are very similar to Liverpool in terms of history, fan base, wealth, etc... and FSG and their owners are rich, but they run their teams a certain way. The Dodgers went on to win the World Series this year with Betts playing a huge part.
This is not out of character for FSG, and this is going to happen to Liverpool. They won't be bad, just like the Red Sox are not bad, but FSG are going to run the club like they run the Red Sox - they aren't going to make decisions that go against how they operate, even if it means giving up a chance for trophies.
What I think this means for Liverpool is that they are going to lose some key, but older, players in the next year or two (Mane, Salah, etc..). They will probably have another 2-3 years in them, but FSG will not give them the deals they are looking for and will let them go/sell them instead. FSG are not going to take money out of their pocket to support the club.
So the fact that Liverpool did not spend big this summer did not surprise me because of how FSG operates in general.