Cutting Off the Flow

For all the monetarists out there who know prices of all items are simply a function of supply and demand, and who also know velocity is transitory, I found this chart interesting. For the first time since the series has been tracked, real estate loans have dropped. And not only have they dropped, they have dropped significantly.







Now I know there is a plethora of reasons why banks are reluctant to lend money. The economy, the housing bubble, new regulations effectively turning off the spigot, etc., but until that valve is turned on again, your housing prices won't recover.