You guys are far too pessimistic.
During a credit driven asset bubble the average standard of living of everyone in the country is artificially raised in a similar fashion to how an individual’s standard of living can artificially be raised by building up large credit card balances. Eventually the credit driven asset bubble bursts and the average standard of living of everyone in the country is lowered below where it should have been like an individual’s standard of living is lowered when they have to pay down the balance on their credit card.
This state does not last forever, and as the problems work there way through the system, technology is developed and productivity improves the economy recovers to a more tolerable level; once again, in a similar fashion to how an individual’s life improves as paying down the principle of the debt and getting a raise/better job lowers the burden of his debts.Inevitably, the standard of living of everyone will return to a level justified by the fundamentals in the economy and this will (typically) be as good or better than the artificially elevated level caused by the credit driven asset bubble.
