Time & Perspective Quote by Martin Feldstein

A polite, bloodless sentence that quietly indicts an era. Feldstein is describing the alchemy of the housing boom: debt repackaged as prosperity. Refinancing didn not just lower monthly payments; it created the illusion of a raise. People felt richer, not because wages surged or productivity soared, but because rising home values let them borrow against tomorrow and spend it today.

The intent is diagnostic, almost clinical, but the subtext is moral and political without saying so. When Feldstein notes that the extracted cash went to "consumer durables, home improvements and the like", he is mapping a transmission mechanism: housing finance became the engine of consumption. That spending looks responsible on the surface (a kitchen remodel reads differently than a vacation), yet it is still demand pulled forward, financed by inflated collateral. It is also a quiet critique of a policy environment that rewarded leverage: low rates, a friendly securitization machine, and cultural messaging that treated home equity as a piggy bank.

Context matters: Feldstein was a prominent, institutionally minded economist who lived through the Reagan era, the financial deregulation arc, and the 2000s credit expansion. His phrasing avoids panic, which is part of its power. By keeping the tone neutral, he makes the pattern sound normal, even rational - and that normality is the warning. A society that can "take out cash and reduce monthly payments at the same time" is a society living off financial engineering, not durable income growth.