[randomdata]

> in the prevailing environment there was no correcting feedback function for that either.

Right. The correcting function should have been everyone else noticing that they could borrow for essentially nothing and use that to fund their grand visions. The increase in demand would have necessitated an increase in interest rates to slow activity. Just as eventually happened when people finally felt they could do something with money (i.e. expansion in economic sectors where supply shocks suggested [no doubt incorrectly – but that will be another problem for another day] that increased production was needed).

It didn't happen because the vision was lacking. What was anyone going to do with it? Nobody knew what to do it. As such, nobody was borrowing in any meaningful way. At best they borrowed to buy houses, but certainly not for productive activities. Those with money didn't know what to do with it either. Lending it to those who had a vision wasn't an option. So, they simply plowed it into whatever was fashionable. And as a result, we didn't get much more than fashion in return.