rich – in your example you are using stocks. How about if we substitute it w/housing. People DID have the money available to them in the form of HELOCs that were used and spent in the economy.
It, in effect, was used as income that kept the economy going, b/c surely most wages were flat (exception for realtors, appraisers, finance and maybe include them in the HELOC supplement, too) though jobs were plentiful thanks to housing.
This phenomena continued for years as housing prices continued to rise. It was a supplement, if you will, to their incomes. It was money that they took every so often from their equity and spent freely and excessively.
Now we have the reversal of that. No money flowing.
Now take the government. I can’t even keep track of how much they have spent, but pales in comparison to all the money circulating in the last bubble. And sure they can print 11 trillion. But it has to be money that’s circulated and spent. I’m not seeing that happen to the degree of our bubble. (thank goodness)
The correction, IMO, needs to take place b/c the bubble was unsustainable and though it may be somewhat painful, throwing more money at a bubble to keep it going doesn’t seem like the answer. Maybe I’m just crazy for thinking this. I don’t know.
