[quote=jpinpb]Okay. I’m trying to follow along, but I’m still grappling w/understanding this. The only thing I keep coming back to is the houses, “asset” has gone down in value. That is fine if you just hold, don’t sell, etc. The money isn’t *destroyed*.
The reality is that people extracted money/equity and went on spending binges. They are not doing that now. Okay. To a lesser degree, people are living for free for up to 2 years, so they still are able to spend somewhat. Things didn’t come to a crashing, grinding halt. Nevertheless, the money being spent and circulated is considerably less.
Yes, the government is printing money. Indirectly this has also allowed people to live for free for 2 years, IMO, and hence money continues to be spent.[/quote]
Sounds like you understand it just fine… the only thing is there is more to the economy than home equity loans, so to the extent that home equity loans are no longer contributing to monetary growth/spending, there are other things that can.
