I shall bring up an old idea I had a while ago that if we really wanted to help America avoid a recession and put her back on track, the the most effective stimulus package would not be to cut taxes (though that wouldn't hurt) or increase government spending. It would be to make any paying down of your mortgage tax deductible.
CDO's might have some value and start trading again. Defaults would go down. Interest rates would go down. And the future solvency of America would improve.
But, as always with modern day America, that's unconventional! That won't work! It's too revolutionary! Why it's so simple, it's like a sales tax replacing an income tax! It just can't be done! It's like Obama winning the democratic nomination! Why, next thing you know women will be getting their husbands martini's, men will learn how to wear suits and buy flowers for their wives, and children will be forced to do their homework and get good grades! What you think this is some mythical place like 1940's America?
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