Drained of consumer purchasing power, the US economy faltered. The Federal Reserve decided to substitute an increase in consumer debt as a substitute for the missing growth in consumer income in order to keep a consumption-driven economy alive.

Interest rates were lowered to unrealistic levels, igniting a real estate boom. Rising housing prices produced equity in debt-financed homes. Homeowners refinanced their mortgages, taking out the equity and spending it, thus keeping the economy alive.