If you accept everything at face value the comment makes sense. If I just believed the brochures and the macro / micro economics I took in college --sure, sounds good. Just like that sage serious stuff you see on all the financial shows if you don't pay attention that the hot stock pick is being promoted by someone who gets money on trades.
Stocks and Hedge Funds are activity to generate profits for people who sell stocks and mega institutions who do more trade in a second than you have in your entire lifetime. The algorithms that select buy and sell opportunities are looking at volatility and vectors -- not the value of the company or what it will do with that brand new widget. If you had to start a company by selling shares of stock today, you've got more luck with Kickstarter than you do with a Venture Capital fund -- the benefit of the Stock Market is like saying that Meth has a month of high productivity and then there are a few downsides but we won't go into that. The Stock Market does not promote good companies over bad ones. Good companies can get ahead but it's totally despite whatever goes on with their stock.
The 2008 Market Crash was NOT CAUSE BY REAL ESATE -- any more than a horse running around a track causes people to lose money betting on the ponies. The Sub Prime loans were often "sub prime" because someone was taking advantage of a home-owner with a higher interest rate -- people with good credit have a hard time with that, and people at the margins have a much harder time with that. Fannie Mae and Freddie Mac, before they were sold the Republican idea of the free market, did a good job getting loans back by not charging a high fee -- the default rates were only slightly higher than the average for the nation.
At the peak of all this "default" it was about 8% -- so what happened? The repeal of Glass/Stegall is what happened. Banks were overleveraged betting on Credit Default Swaps. They were able to use these as deposits because they had "property" somewhere in the title, and then use factoring to act like this was an asset and issue more money to buy more credit default swaps (this is why banks USED TO BE prohibited from speculative investments).
The problem was entirely one of high finance and fiscal discipline with people who got all the benefits and none of the responsibility.
The problem with finance in America is too many yokels go around spouting this "free market / finance BS" -- because they made some money selling people Financial Services. Financial Services may make a lot of money for a few people -- but it does squat to produce anything of value or empower anyone who is actually working for a living.
You start making some sense again when you talk about the velocity of money; "circulation is reduced because people are using the money to pay down debt." The big problem is that the distance between the Fed and the people with Big Pockets is shorter. If you just handed everyone in the country the trillions going to prop up the banks, you would have many more transactions -- and thus, the "velocity of money" would go up. "Velocity" is a medical term so that people can charge you more for saying; "more buying and selling".
Don't feel like I'm just picking you out -- you aren't worse that most people I hear talk about Finance - Hell, almost everyone talking about finance is brainwashed by people in finance.
I'm sure the people who used to sell religious artifacts also had a lot of important information on the value of the virgin Mary's milk.