Ben goes for Mortgages finally!

Ben, Finally we are seeing you go for Mortgages. You should buy outright mortgages from the banks
in a move aimed at removing a set of homes off the market for a few years while the housing market
gets back on its feet. And work with Freddie and Fannie to shore up the homeowners. While you
misgauged the effects of policy and what was to come along with Bazooka Hank, it is important to
support home-ownership as it is the single largest asset for those who have a Household net worth of
under 250,000. This is not a Fed goal, but it should be.
Cheap capital can create jobs. What has happened in the 2008-2010 crisis is that money moved away
from the small towns into Wall Street. As values plummeted the small towns became poorer and their
ability to sustain people and build communities declined. The displacement was coupled with a jobs
displacement away from small towns as well. Credit has not returned to smaller towns as muni budgets
and state and local govts have shrunk. Expenditures by the Federal Govt. and the Fed, should target these depressed communities. When Amartya Sen looked at scarcity, he explained how there were sections of the
populace that were left out. The state he felt had to step in and create work there. The same is true about
the Fed today. Aggressively buy Mortgages in affected communities to help shore up real estate. Work with
local banks in building a base for credit reconstruction and rebuilding of these local communities.
This is the private sector answer. It has never been the case that the Fed has worked with states. But this is
perhaps the time to do so. Build a policy schedule that is aimed at reinjecting capital and credit into
smaller towns and rural communities, so that a rejuvenation is possible.