> The collapse of that pyramid is exactly what happened, IMO, and it wouldn't have been possible without the sub-prime lending. imho, housing prices would have

> The collapse of that pyramid is exactly what happened, IMO, and it wouldn't have been possible without the sub-prime lending. imho, housing prices would have declined sooner. The valuation of houses was already wacky in 2001 by many measures. For example, look at the price-to-rent: https://3.bp.blogspot.com/-GVhHsBNhPfE/WP-6gJXNhTI/AAAAAAAAq6g/KfHIu3Mj86suoDIK-uM_EFCq3wEgVbZfgCLcB/s1600/PriceRentFeb2017.PNG https://3.bp.blogspot.com/-GVhHsBNhPfE/WP-6gJXNhTI/AAAAAAAAq... In 2001, prices were already at the level of the 1989 real-estate bubble: Older folks will remember the savings and loan scandal, which was the result of the 1989 bubble collapsing. The Fed thought it needed to compensate for the internet bubble collapsing, which was a large contributor to the ensuing mess in housing. It has to make us wonder: If compensating for the internet bubble lead to the housing bubble (and collapse), what will the result of compensating for the housing bubble be?