Or how Judge Roberts fixed the housing market. I think one of the more interesting aspects of the surprise decision by the Supreme Court to declare forced consumption constitutional by virtue of the federal taxing power is its potential use as a device for economic intervention. Since savings is the bane of the neo-Keynesians, the newfound ability of the federal government to dictate consumption means that there need never again be a savings glut, a demand gap, or what Paul Krugman decries as insufficient inflation.
For example, since there is presently insufficient demand in the housing market, the Congress can address this by simply passing a law requiring everyone with an annual income of more than $75,000 who does not presently have a mortgage to purchase a house with a price of at least $250,000 or face paying a tax of $15,000. Because the annual cost of the mortgage payments would only come to around $11,500 at current low interest rates, most people would choose to purchase a house rather than pay the tax, especially since there would be an implied “Roberts Put” providing a reasonable expectation of decent profits on the forced investment. Such a law would be perfectly constitutional, as per the court’s recent decision, and it would have an undeniably inflationary effect on home prices, bank assets, and national wealth while reducing those pernicious savings rates and ending debt-deflation in the household sector.
Surely permanent economic prosperity is nigh!