Prosperity amid Stability A New Economic Paradigm for Democratic Capitalism.

1. A Sagacious Interest Rate Policy

There used to be a tacit policy of the US Congress to ensure that mortgage interest rates did not exceed the
Fed Funds rate by more than about 2.5%. I have read about the U.S. Congress raising voice whenever this
policy was transgressed by banks. The 2.5% premium is sufficient to cover debt service and earn a fair return
on equity capital invested in financial institutions. This policy is not only sound in terms of fairness, it is also
central to the crisis we are facing now.....

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