Money has to go somewhere. A simple observation. It runs where people perceive the most opportunity/security. The fed flooded the markets with money in 98-99 in anticipation of the much-balleyhooed "Y2K" crisis, and the money went to stocks, mostly tech stocks.
That bubble eventually popped, and we were beginning to work through the excesses of flushing so much cash into the system when 9/11 hit. Several of the world's largest reinsurance facilities (the entities which provide insurance to insurance companies..... yes, there are such things) technically went bust. The different regulatory agencies allowed them to continue to operate out of a fear of what it would do to the world economy if they went under. The world, and ESPECIALLY the federal reserve in the USA, flooded the markets with money yet again -- they call it "liquidity" -- in that they printed a bunch of paper and shoved it out there at extremely low interest rates.
However, with people having just been burned in a big way by the tech stock bubble collapse, they were reluctant to shove this money back in the stock markets. Memories of Enron and MCI scandals were too clear. Plus there were plenty of stock collapses with no scandal at all. Look at a 10 year chart of JDSU, one of the darlings of the techies. It went from over 200 dollars a share to under one dollar. Who wanted that kind of risk?
People invested their money in something "hard" and that would endure, and could generate rental income. Real estate was secure, solid, and unplagued by the excesses of valuing something at 50 times future PROJECTED values and other such foolishness. Thus a real estate boomlet began.
That series of events coincided with an interesting cultural phenomenon. For years, a little known radical leftist group which advocates for "social justice" had been screaming that minorities are discriminated against for housing loans. ACORN convinced a large mortgage lending facility to --in the words of its CEO-- "bend the rules" so that lower income people who would not normally qualify for loans could get them. The company was called Countrywide, and it was just saved from complete bankruptcy by being bought out by Bank of America. However, in 92, things were different. They bragged about "bending the rules." When no one slapped their hands (they were actually praised by the head of the Boston Federal Reserve), everyone else jumped on board. All kinds of hinky loan packages were contrived. Everyone was buying, and with the flood of money goosing the system, housing prices were rising like YAHOO of the 90s, so no one was getting hurt. Everyone was getting rich. I had two of my own customers speculating in real estate rentals who literally could not pay their cell phone bills monthly. Yes, it was another bubble, and it was bound to pop.... and so it did.
The fed is responding to the present "crisis" in the same way it always does......, by inflating the currency (aka "providing liquidity"). So where are we now? People don't want the risk of equities, and even if they wanted to speculate in real estate, there aren't any mortgage companies left to lend them the money to speculate. The ones that have survived are looking for stability, security and solid future numbers......, and those are in short supply until the present meltdown in housing prices finishes out.
The fresh flush of money is finding its way into the last, "safest" refuge in this world, that of hard "real" stuff. Gold, silver, platinum, wheat, steel. corn, lumber, etc. All are going up at a dizzying pace. It is a return of the 1970s, with an inflationary recession. The noteable thing about the volume of money we have that is starting to chase commodities is how thin these markets are and how easily distortable they are. When you compare the vastness of equities, or currencies, or real estate with the paltry amounts of money traded in say, silver, you are witnessing the potential for a price explosion that makes the Hunt Brothers attempted corner in 1980 (silver went to 50 dollars an oz) look like a small blip. There are limited amounts of these items, and if things continue, there will simply be price explosions, not "rising markets"
It is going to be a wild ride.