The biggest shock from this is that decreasing mortgage applications reduce the total sum of money in circulation thereby destroying wealth explicitly. More M

The biggest shock from this is that decreasing mortgage applications reduce the total sum of money in circulation thereby destroying wealth explicitly. More Money is created by banks via mortgage loans than QE by the fed. As more existing loans are paid off, the money is removed from the pool due to reserve requirements. Dropping house prices create a credit freeze that can only be resolved by excess QE but QE is not happening anytime soon unless....