Submitted by flow5, Mar 24, 2008 13:25

First, government guarenties that support a seconday market will monetize the mortgage market, i.e., it is inflationary. Second, the money & credit depository institutions should get out of the savings business (REG Q in reverse). Money flowing to the mortgage market actually never leaves the commercial banking system as anyone who has applied double entry booking on a national scale should know. And why should the banks pay for something they already have? Disintermediation is only applicable to the non-banks, not the commercial banks. This solution would vastly increase the profits of the commercial banks, increase the volume of loan-funds to the non-banks, decrease long-term interest rates, and increase real-gdp.

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