Hi newtothegame "RE: where is all the money flowing to given the reduced demand for loans."
I think you have missed the point of the current problems.
Banks can't onsell the mortgages right now so money in effect can only be lent once. Also borrowing money short term at high rates to lend out long term is not a smart idea right now - so monies going into the bank is needed for liquidy levels. Basically the banking model that has been used before this crisis may not be broken but is definately flawed.
