America became great with cheap credit. Borrowers believed their projects would bear fruit. The lenders used the loan payments to extend credit to new borrowers.
This worked well until a significant number of borrowers failed to make the payments. With inflows decreased the lenders lost confidence they would be paid back.
Suddenly, the new potential borrowers couldn’t find money on loan.
The intended projects never started and new job creation halted.
Rampant unsecured stock manipulation triggered the Great Depression. This time around the housing bubble burst.
By the time the Fed began to throw money around, almost all lenders and borrowers had lost the confidence to make a move.
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