Measuring opportunity costs

Monetary Freedom:

But clearly, individuals who don't want to buy houses can instead just hold money. And that is the problem. When people choose to hold more money than the existing quantity, then total spending in the economy falls. It is still true that scarcity exists and that the reason to reduce the production of homes is that the resources could be used to produce other more valuable goods, but nominal expenditures on those other goods doesn't increase.

Is this true? Did folks reduce spending on housing and hold money? That would be a change around 2006. My problem is that I see strong anomaly in 2003. Did someone in 2003 start to hold money?  The channel gain, the profit from specialization between consumer and producer, it got squeezed, badly starting in 2003, oil shartages made business impossible in 2008.

 The the system reset back to a deflated channel, the gain from specialization [Levine] went above the normal, at the cost of reduce channel dimension.  It is not that people wanted to hold money, it is that there was a ton of paper left from the consumer borrowing just prior to the crash.  Not a desire to hold paper, just a bunch of extra paper that goes somewhere.

In the Levine sense,  the bankers failed to reduce a K chain to a K-1 chain in the face of a a real goods rank reduction.  You see, bankers being light afoot get to use simple math, they get to assume a Levine dimension of infinity. At the moment, the math goes bad, they had a bit of panic, then bartered a split of excess paper.  Now the bankers are settled into the consequences of K-1 banking, when things seem stable, they will start using the simple math again.  See, that is the great utility of money: The assumption of reversibility makes profit and loss accounting simple, but the real economy has to support a positive definite inventory channel to support  bankers.

I see nothing here to scare anyone, bankers get over the hysteria, and money works again.  The problem since 2003 remains; energy efficiency vs oil shortages. I think we get energy efficiency, we win.