The economy can be compared to a dry sponge and a pitcher of water can also be compared to all the debts and monetary and fiscal stimulus the Fed and the Treasury had been dumping into the markets. Now at first when we begin pouring the water on the sponge, it will start absorbing the water and the sponge will become wetter and wetter. When the sponge finally reached a point that it has absorbed so much water that it simply can’t absorb anymore, the sponge won't absorb another drop. In other words, the sponge has become “super-saturated” with water, and it will start spilling over on the plate. Over the past few decades, in order to avoid any type of crisis in our economy or financial system, we've been pumping money and debt in the system. After the dot.com crash, Alan Greenspan lowered interest rates forcing money into the economy and inflating what would become the housing bubble. Once the housing bubble began to collapse, Ben Bernanke lowered interest rates even further and began clviii
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