--------------------- I didn't really leave it out. I just don't think it's a primary problem. Like saying Tom Brady can't play football because he doesn't have confidence his knee will work. People don't spend because they know they don't have enough money (money, credit, including current and projected amount thereof). I think what people really mean is they are not confident that they have enough money, or those who they lend to will make enough money.
In truth, all kinds of wealth are market determined. Now, most people would say that the most static wealth is cash. You have that dollar bill, and it is yours. However, behind the scenes, that dollar is always depreciating or appreciating in value, which makes it easier or more difficult to buy things, especially when you are bidding for stuff against alternative currencies. The obvious example is going overseas. But less obvious, is when the dollar loses value, then it makes it easier for foreigners to buy our goods, such as real estate. Thus, real estate would go up in price, because you would have to pay more dollars to compete against overseas investors and currencies. So money is appearing and disappearing, subtly, even in cash. More obvious, are things like the stock market, where wealth is created, when someone bids for similar types of asset, e.g. a share of stock, and it is destroyed, when someone bids less. So this type of wealth, is more obviously appearing and disappearing based upon how one values the asset. There are all kinds of ways to value assets, and it does not have to be the last bid. For example, real estate can be based upon the average, not the last bid. It depends how conservative or aggressive you want to be in valuing assets. Now, one great way to see money disappear, is when you loan money to someone, and you keep that money on your books as money due, as well as interest due (accrual accounting). Now, if that person decides he/she is not paying back the money (the housing market), poof! that money is gone. The poof! gets really bad, if you have leveraged your investments. If you have loaned out $1000 with only $100 in your pocket. You do this, because you don't expect more than 10% default and you can collect 6% interest on $1000 instead of just $100. (You borrow the other $900 from the Feds at the very cozy rate of 1%). Now, when 30% of the lendees goes bust, you are out $300, so you go bust. You can't pay back the $1000, so your lender goes bust. That lender goes bust, ... well you got the idea. You have the amazing 2000 decade!