Yes, it will and it has: In 2008, the banking system imploded. Owing to a number of things, but primarily securitized lending leading to too many bad loans, lo

Yes, it will and it has: In 2008, the banking system imploded. Owing to a number of things, but primarily securitized lending leading to too many bad loans, losses in the banking system exceeded the amount that could be absorbed from loss provisions and profits. (Which as point of reference, isn't that high to begin with, it's no more than about ~0.75% of total loan capital/year). The US (and other countries) did two things - they bailed out the banking system's asset losses, and they lowered interest rates. Had no intervention at all occurred, there would have been a great depression style crash. That would have led to substantially lower house prices (due to the destruction of money/credit) - but it would also have destroyed anything else in the economy that depends on credit. Had just the asset side bailout occurred (this is essentially Quantitative Easing), and interest rates been held high - housing prices would still have dropped. Lower interest rates translate directly to being able to afford larger loans, larger loans mean non-linear (leveraged) higher house prices in any market where housing is in any kind of scarcity/high demand. Now it could be argued that it was necessary to do both to stop the banking system failure from destroying the economy - but in that case, and with house owners clearly benefiting preferentially, why wasn't some form of compensation advocated for all the non-house owners in the economy?