[raybbr]

For years economists have been telling us low oil prices stimulated the economy. What changed?

[SkyPilot]

I think most economists know it is great for the average consumer and the middle class. They will have more money to spend in other parts of the economy, money for college payments, money to save or pay off other debt, etc.

But.....

The banks will demand they get their loans back, and will put the brakes on further credit. That makes the Fed very, very nervous.

Falling oil prices hitting economic growth: Fed (7 hours ago)

[Vermont Lt]

The entire economy is based on constant increases in prices. When those prices decline, the revenues to pay the debts (leverages at 100:1) fail to come in.

Consider that you’ve had a steady stream of income, and you rolled that into mortgages on big apartment complexes. All you need to do is fill all of the apartments and keep the rent coming in.

But all of a sudden, you have a vacancy problem. And the revenues are not coming in.

You default on your mortgage.

The bank, counting on hour revenues increasing every month, rolled their investments up at 100:1. Now they cannot pay their mortgage....

Do you understand how this goes from the oil companies losing money to the bank on the corner going broke?