[quote=patientrenter]
(Oh, and of course persistently high inflation would be the only practical way to achieve this.)[/quote]

Paulson has already admitted to this. In a Congressional hearing a few months ago Paulson said there were two ways out of this: The U.S. could inflate its way out of this by bringing house prices up to the price of the mortgage on the house or the U.S. could crunch the mortgages down to the price of the house.

It’s pretty clear they would like to choose the inflation route. However, I don’t think $700 billion is going to do it.