"What’s keeping people from buying houses is the fact that other people aren’t buying houses. If there were some sense that a bottom was forming in the market or in house prices, we probably could actually see a pretty quick snap-back, an increase in housing demand, and that in turn would feed back into the credit markets, I think, in a very beneficial way. So there’s the possibility that, if the housing market can get restarted, we could get a relatively benign outcome." ~ Ben Bernanke, then Chairman of the Federal Reserve and Economics Ph.D., MIT, from the January 29–30, 2008, Meeting of the Federal Open Market Committee of the Federal Reserve

Today, the Federal Reserve System, the privately-owned, monopoly bankers' bank established by Congress and President Wilson in 1913, released documents from the 2008 Banking Crisis, which key executives revealed their beliefs about banking, credit and trade. The quote of Bernanke above is one of the many silly-minded beliefs expressed by a handful of men and women who lord over the lives of all Americans because they control the Federal Reserve and thus all of banking and credit for Americans.

Too bad Ben Bernanke has no idea about what keeps people from buying houses. Too bad for us, a Congress and President Wilson back in 1913 decided that a central bank monopoly should be created to govern over all of banking, naming it the Federal Reserve, and entrusting guys like Ben Bernanke to run it.

Bernanke seems to believe that Americans are mindless lemmings who buy houses on whims merely because they see others buying houses on whims.

There is one great axiom that governs all of trade, the Axiom of Profit. The Axiom of Profit holds the sum of sales must at least equal the outlays for production otherwise, the producer goes to ruin. And for wage earners, the Axiom of Profit is alike — the sum of wages (income) must at least equal the outlays for living, otherwise the wage earner goes bankrupt.

Almost all persons rely on obtaining mortgages for buying houses. When prices for houses rise too high, and when the sum of wages fails to equal outlays for taxes, gasoline, heat, food and the like, the wage earner lives at a loss and thus falls to ruin. 

What kept people from buying houses past the peak of the realty bubble is that all those could buy on the way up, already bought. There were no other Americans willing to buy. Everyone else, even if they had profit from the sum of wages exceeding their outlays for living, were unwilling to pay prices for houses and take on debt service. Mostly though, almost all of those who didn't buy couldn't buy at the offer prices and still break even.

What a Residential Realty Bubble Looks Like

Even those who had bought began to live at losses when prices for gasoline rose high enough to push them into the red. Once the avalanche of collapse began, many mortgage-serving wage earners lost their jobs and thus their wages. Widespread collapse of the general economy followed.

As I explained in WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE, profits and prices are the key indicators, which give signals for trade among a people. The Law of Prices and the Axiom of Profit reveal the true governing forces irrespective of markets-meddling political action. 

The key factors that must be watched are bank deposits and profits. Any banker worth her salt, will tell you bank deposits aries from discounting and re-discounting commercial paper, from loans and from profits. Deposits represent buying power and lead to rising prices when deposits outstrip property production. Rising prices crimp profits, eventually causing losses for many, leading to collapse.

No where in the discourse among powerful Federal Reserve executives can anyone find discussion about deposits, deposit growth, profits, falling profits, losses and prices. No where did these men and women with their fancy academia credentials discuss the crucial relationship between deposits growth and profit or loss growth for what was a $14.8 trillion system of trade, 95% of which was based on credit.

The Federal Reserve needs to be stripped of its power in setting interest rates. It doesn't matter who sits as Chairman of the Federal Reserve. A handful of men and women lack omniscience and without doubt are not smart enough to know what should be the interbank lending rate and what should be lending and borrowing rates for commerce. 

As I explained in WHY FUTURES MARKETS SHOULD SET THE FEDS FUNDS RATE RATHER THAN THE FEDERAL RESERVE BOARD OF GOVERNORS that through the brilliance of a futures market, Americans could safeguard their livelihoods for all time returning to freedom, returning to living among a people who get rich from earnest effort rather than political connection.

For his adult life, prior to getting the appointment at the Federal Reserve, Ben Bernanke worked as a school teacher, spreading the mythology of economics to young minds. Bernanke never worked in banking nor held any job related to credit, the chief material of buying and selling, the whole of trade, or what many call "the economy".