[smallmancontrov]

They become asset holders on worse terms. Now they must maintain their predecessor's degeneracy to simply not lose money. If they want to gain money, they must figure out how to impose even more degenerate terms on those beneath them. Ratchet goes click.

Eventually it implodes. People who got in early on the ponzi walk away with windfalls but the last generation is the largest generation and it gets to hold the bags.

[JumpCrisscross]

> the last generation is the largest generation and it gets to hold the bags

You're describing a housing-price decline as if it didn't happen less than two decades ago. It's painful, because of the leverage. But a lot of Americans are uniquely equity rich in their homes right now. The missing pieces in your equation are (a) default, which wipes out the debt and (b) real economic growth. It's a tragedy that so much of (b) gets funnelled into real estate prices, but that's a policy choice and far from unsustainable in general. (Versus at specific price points.)

[smallmancontrov]

2008 was not a reversal in the secular decline in interest rates and increase in leverage. Quite the opposite, it just ushered in the next leg. While you are correct that (a)+(b) can keep the party going under all conditions we have seen for the last 40 years and likely for the next 10, the trouble is that if you hit the (a) default button too much people eventually get tired of the inflation and force you to deleverage and reduce prices (in real terms). This is the actual bust.

Or maybe replacing our workforce with robots is actually deflationary enough to make it different this time. Who knows.