Quote:
Originally Posted by chipj29
I heard the same figures yesterday. $1 trillion. But then I thought...where does the money go? I know it sounds dumb, but that is a serious question. Did it ever exist in the first place, since it was loans?
|
The money existed in the form of investments that could be sold for cash....
Hypothetical (not really) situation... (this is happening all over as we speak)
Your have been saving money since your kid was born... you saved $100K for your kids college. What you really saved was $50K, but because you INVESTED the money in a fund, and Wall St. was doing good your savings grew to 100K!
Your kid started college this month....
So you decide to cash out and get some $$$ to pay the tuition.... and lo and behold your $100K has been vaporized overnight into $70K so now you can only afford to pay for 3 years of college instead of 4! and the fund is continously dropping precipitously in value by the day...
So you and (everybody else) yank whats left of your money out... enough people do that and the institution fails....
Go watch "It's A Wonderful Life".... its a pretty simple explanation of whats going on.... except on a much much larger scale....
Woodsy