Money DOES grow on trees...

Tom is a builder. He cuts down a tree and builds an extravagant house with it. Tom then goes to Bob, who is barely struggling to survive, and sells Bob the house.

"I can't afford to pay this house", says Bob.

"Don't worry Bob; my banker Mike will give you a loan. You do not have to put anything down, I'll give you a very low interest rate, and you only have to pay a small monthly payment to Mike for the first 3 years. After 3 years, your interest will double, so you'll have to pay Mike more. But before that happens, your house will go up in value and you can sell it and make some money," replies Tom.

Sounds like a good deal, so Bob bites. Tom made money by selling the house, and continues to do so doing the same thing.

Mike gives Bob the loan, then goes to Investment Banker Larry and sells him a bond.

"Look Larry, this bond is top quality grade A security. It has a fixed income backed by Bob's mortgage", Mike tells Larry.

Larry bites, and buys the bond and other similar bonds from Mike. Mike made money by selling the bond, and continues to do so doing the same thing.

Larry then goes to overnight lender Sue, and borrows money to loan to Beth so that Beth can buy a business from Amy. Larry makes money because Sue charges him an interest rate lower than what he will make off of Mike's bond, so he continues to do so doing the same thing.

Bob got a house! Tom made money building and selling houses! Mike made money from selling his bond! Larry made money from borrowing short and lending long! Sue made money from lending to Larry! Beth made money by owning a business! Amy made money by selling her business!

Oh Glory, money does grow on Trees! The trees Tom chopped down to begin with.

Three years later...

Bob's mortgage and interest is about to jump, so he goes to sell his house, like Tom suggested. However, since Tom told everyone the same thing, everyone already has a house. "Oh Snatz!" says Bob. "No one will buy my house now, so I better lower the price and sell it soon."

Too bad for Bob, everyone including the Dick's and Tard's of Shmucksville is doing the same thing, so now Bob's house is worth less than what he owes. Bob can no longer pay his monthly mortgage after it jumped, and has no reason to keep it since he owes more than what his house is worth.

Bob abandons his house, file bankruptcy, and move on, loosing everything he put into his house the previous 3 years.

Since Bob can't pay his mortgage, Mike's bond is worthless, which makes Larry's assets worthless, which means he can't pay Sue back for her loan, which disables Sue from making any more loans, which means people like Beth can't have any money to do business, and may have to fire people, which means those people won't have any money to buy things from similar businesses like Amy, so Amy can't sell her business...

Now everyone is broke! "Oh Snatz..."

(Of course, this isn't exactly how it happened, but is close enough...)