Where has the money gone?

[tw]

Originally Posted by Aliantha

Well if we're going to talk about trickle down effect, then it definitely happens a lot fucking quicker on the way out than on the way in.

Trickle down is a myth based in political agendas; not in economic principles.

The idea was to solve a liquidity crisis. Nobody was broke according the theory. But since Enron accounting principles are so rampant, then the idea was to flood finance markets with money - like too much oil on a rusty bolt. Reality, assets had completely vaporized leaving a resulting debt AND those debts were well hidden in Enron accounting. Those unknown debts were literally sucking up the money.

This is better explained in How the GAME is played..

Bottom line - something like 40% of this nation's wealth simply vaporized leaving outstanding debts. How does accounting work? Much of that wealth has disappeared long ago. But reality from spread sheets tends to suddenly appear like a rogue wave. Welcome to reality finally popping up like splotches of grass on a desert prairie.

Cellar dwellers had to know this economy had serious problems. The housing bubble was pictured on the Economist's front cover as a falling brick labeled Housing Prices. That cover discussed here often. Charts made obvious that homes were 20% and 40% overpriced. The Economist noted this problem very recently (recently in Economics terms) on 16 Jun 2005 which was reposted in the Cellar also in 2005:

Perhaps the best evidence that America's house prices have reached dangerous levels is the fact that house-buying mania has been plastered on the front of virtually every American newspaper and magazine over the past month. Such bubble-talk hardly comes as a surprise to our readers. We have been warning for some time that the price of housing was rising at an alarming rate all around the globe, including in America. Now that others have noticed as well, the day of reckoning is closer at hand. It is not going to be pretty. How the current housing boom ends could decide the course of the entire world economy over the next few years.

That was a symptom of wide spread and out-of-control money games being played by finance people. People who historically are only a service industry and yet pay themselves as if they innovate and produce something. Just another example of why so many hard assets are missing in finance institutions.

Zengum asked 'when did the money go'. So accurate. To understand what he was saying, read post 1 in How the GAME is played. It completely answered this topmost question.