When I was a child I was taught that the US dollar was backed by gold. In fact, the very gold stored in Fort Knox was the "gold standard" by which the US dollar had and held such high value and esteem the world over. Gold was replaced by positive consumer confidence which can be analogized to a freight train running at full speed and not making any stops. Guess what the train hasn't stopped - it's just running backwards. This is just how the market works: it can rise and it can fall. Consumer confidence has all but faded away too.
So, what was left to give our dollar its value? The American Dream of homeownership replaced all previous benchmarks to dollar valuation. It was a great thing - everyone wants to buy a home and let's make it easier for everyone to do that. When creative mortgage products and creative accounting practices were permitted to run amok and be tied back into every aspect of the American economy we now had a mortgaged economy based completely on debt and not on substance. Every homeowner would need a car and furnishings and electronics to fill the home. And after all property values were going up and up and seemed as if they were never going to come down. Think again. Sophisticated Wall Street brokerages along with powerful lobbies created many investment products such as mortgage backed securities allowing a stripped down and broken apart individual mortgage notes to be combined with other similar performing products and packaged them up and sold them as another investment. It is quite possible that someone reading this post owns a note in a retirement portfolio through their job that feasibly is linked back to their own or a neighbor's primary residence. Every month mortgages are resetting and more and more people are finding themselves the recipient of a notice of default and/or judgement and facing foreclosure thus de-valuing the US dollar even more.
What can you do if you want to borrow money to buy a home? Consumers need to know that if they can verify and document income and have 20% minimum downpayment they WILL get a mortgage. If you are looking to buy real estate only look for a fixed rate mortgage for a fixed period of time. Perhaps you'd like to pay off your purchase with a 15 year loan. Learn the numbers and what it's going to cost you every month. Ready, willing and able means ready and willing to change your (financial) life and able means the ability to repay the loan. Freedom comes with responsibility. Consumer confidence can and will return through basic mortgage lending without all the complex lending schemes. However, the gold standard that backs our dollar will more than likely change to another collateral. For our own persoanle finances we need to keep it simple.