Based upon Adam Smith's pricing principle (Wealth of Nations):
When the level of demand in the economy rises during an economic recovery, the cost of everything should be able to rise proportionately and that includes all spending on mortgages so that no spending in any sector starts to consume more income than usual just because of the (mortgage) model or the (taxation) model or any model that is in use.
The same should apply in reverse: as far as possible, all spending should reduce across all sectors as proportionately as possible during a slowdown.
I regard this as key to the design of any future models for the economy: spending patterns should be determined by the people and not automatically interfered with by the mortgage, taxation, or other structures.
With that in mind I also looked at other structures which automatically interfere with wealth distributions and spending. As we know, the wealth effect does alter spending. I found some more bad financial structures which defy Adam Smith's law, mostly linked to government borrowing and business loans. You are welcome to ask me about that too. These distortions happen automatically. They alter wealth and spending patterns for us without our consent. and their interference could be a significant unwanted cost to government (tax payers), and businesses, and to the rate of real economic growth.
To give you a true story: this illustrates my point rather well.
In the 1980s, the oil price crashed down to $11 per barrel having been previously inflated (I was told). Whatever the reason, mainstream economists all expected an immediate boom in the oil consuming economies. That is what their models showed. But models make assumptions.
My model gets re-built in my head for every circumstance and my model said that there may be a slowdown. And it took those mainstream economist six months or so to find out why. The reason is that when you take income away from any sector of the international community, overall spending drops before an adjustment can be made - before new jogs are created and new spending starts elsewhere.
The same thing happens if you take wealth away from any sector in a national economy, or if you put wealth at risk or make wealth unstable. And the same thing happens if you divert spending power into higher-than-needed mortgage repayments.
If you take wealth away from pension funds to save the tax payer money (which fixed interest rate bonds can do), or if you pay too much interest to compensate for that risk to the buyers of government bonds / debt, you cause instability everywhere. If pension funds lose and the government (tax payers are winning), companies may have to dig deeper to fund staff pensions whilst tax payers are better off. But the tax payers are the ones hoping for jobs and pensions. The books still have to balance. All we get is an injection of uncertainty and the cost of risk which is added and pays handsome salaries to risk managers. And it expands the industry of financial advisers who are paid to examine and recommend the ‘best bet’ investments instead of finding out which companies are best managed and steering funds their way. It is a total waste of resources to have uncertainty.
Simple people want a n AEG-linked 'Wealth Bond' that they can trust to preserve their wealth. Without that and without safe mortgages and safer pensions they get forced to hire expensive advisers who can only guess what is best for the public.
All of that,and sleepless nights, is the price of man-made uncertainty and risk.
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