Yes, there’s the psychological component, but one might argue that an economy that depends on psychology vs. fundamental economic health is a very sick economy.
Again, people spending what they don’t have is the **problem.** IMHO, we need to get rid of the notion that some illiquid asset (especially a primary residence) somehow equates to “wealth” (an arbitrary number pulled out of the air, like when a neighbor sells for $XXX,XXX to a buyer who cannot afford the agreed-upon price without a “toxic” mortgage) when it’s not realized.
IMHO, this psychological aspect is what’s so ponzi-like about our economy. Everything depends upon the next person overpaying for an asset using increasing amounts of debt. That is simply not sustainable.
