"Oversupply tests foundations of U.S. housing market," begins an article in the Financial Times.

The foundations of the U.S. housing market hardly need to be tested. We know what they are built upon: credit. But credit is not granite. Instead, it is soft. And when it gives way, down comes the housing market with it.

"New Signs of Cooling in Housing," announces the New York Times. The signs it sees are the same we are all seeing. "Housing trouble in Idaho," says one headline. And from another in South Florida: "11,000 condo units unoccupied."

We began this week with professors telling people what jackasses they were for not investing in an optimal way. They make "mistakes," complained the experts. They sell stocks too soon, or hold onto to them too long. They buy the wrong stock, for the wrong reason, without a clue about the business model. And then, they stampede with the herd and lose their money.

The professorial finger-wag is beside the point. Investors may err, but they err with a good reason: they are only human.

Besides, there are times when choosing one stock over another is as moot as picking the color scheme of an Atlanta house, the day before Sherman burns the place down.

Which is why we find the whole Behavioral Finance School rather shabby.

The poor consuming-investing-house-holding lump takes the blame for being an idiot. But did he invent the credit bubble? Was keeping the money supply under control ever his responsibility? Of course not. It was always well beyond his pay-grade. And why should he have to study macroeconomics to take out a mortgage? How was he supposed to know that free trade would mean lower real wages? How was he to know that rising real estate prices meant something more than just free money for everyone?

As the free money dwindles, real estate sinks. And as real estate sinks, the marginal buyer sinks with it (see below). His house is too big for his wallet now; he has to throw it back. If he doesn't cut bait, the fish will drag him down.

And the same dimwit pundits and economists who hailed the financial industry as irrepressibly innovative, now call the poor lump an idiot for taking out one of its most irrepressibly innovative products: an adjustable rate mortgage. He should have known better, they cackle knowingly.

But how could he know? A society hangs together by having a few sure things even idiots can count on. The value of its money, for instance. But, with house prices doubling every five to 10 years, what were people to think? As far as the housing it would buy, the dollar was disappearing rapidly. If you didn't get on board right away, young couples told each other, the housing train would leave without you. Soon, you wouldn't be able to afford to buy any house at all.

We have a friend to whom that has happened. Ten years ago, he got married and considered buying a house, but prices seemed too high. So, he rented. Now, he has four children...and they live in a trailer; everything has doubled or tripled over the last decade. He can afford to buy a house even less today.

Houses just haven't stayed still. But if a man can't trust the floor beneath his feet to stay put, what can he count on? What stars are still fixed in the heavens?

The Fed-induced property bubble turned the whole nation into a Vegas casino. That same bubble turned the lump into a rube fresh from the cornfields, wide-eyed and deep drinking, but with only a shallow grasp of the game he had stumbled into. And before he knew what was happening, the farm boy had gambled away the farm.

Here in the land of the free, he will be a slave for life...with a mortgage that will see payments rise and a house that will see value falls.

He will be a slave with bills that are mounting and paychecks that are dwindling.

He will be a slave with a share of the national debt that can never, ever be wiped out.

The new poster child for the Squanderville: a slave to government debt, shackled to a hollowed out house, hobbled by a hollowed out labor market, trapped in sprawling suburbs built for cheap oil...in an era when oil prices are exploding.

Surely the day will come when the slaves too explode...

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.