Convergence

The collapse in new home construction is because the prices of existing homes rose too high in the phony bubble. This has caused a surplus in existing homes, and stalled demand for new homes. This inventory of homes must be cleared before new home construction can rebound. Throwing more fiat money from monetized Treasuries into the economy will delay the repricing of existing homes. This oversupply is larger than we even realize because banks are hiding a giant shadow inventory of homes that have delinquent mortgages but have not been pushed through the foreclosure process.

Prospective homeowners need to soak up the inventory created during the bubble. Home prices must fall so the price point will be in reach of consumers, who are facing much more of a struggle to obtain credit. Inflationary policies will stall the necessary convergence of home prices and consumer buying power.

How can you condemn the economic mismanagement of Greenspan and Bernanke and then suggest re-applying the same tool of cheap money that they misused?

You can't support clearing the inventory of existing homes AND support a new construction cycle at the same time using the tool of cheap money. Cheap money will reverse the falling home price trend and that will instantly cancel out any hoped-for surge in new construction.

More cheap money cannot remedy value distortions produced by a lengthy cheap money binge. Deflation is the friend of the prospective homeowner today, not inflation.