I am not a trained economist.......................

........but it looks to me like the problems in our economy could be
directly related to the "refinance bubble" of 2003.  An incredible
amount of  typically illiquid housing equity was turned into
spendable cash in a very short time period and then spent on stuff,
more real estate, or stocks.  We went from a nation of citizens
with significant financial reserves to a nation of citizens with very
little margin for error.  Message to my kids:  debt is a two-
edged sword, and one edge cuts sharper than the other.

This chart shows both the course of interest rates over the past
20+ years and the amount of refinance activity.  The big spike in
2003 is believed to be the self-induced-equity-reduction-by-
conversion-to-cash-and-debt phase of the process.The echo
boomlet of 2009 was probably to take advantage of lower rates
on existing debt with very little new debt added

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