Rather than using the blunt tool of monetary policy to induce prudence, we should examine more closely the possibility of using regulation and prudential supervision to address concerns about overleveraging and other risk-taking behavior. In short, we still do not fully know what caused the run-up in house prices and over-building.
For instance, in El Paso, I visited with several vibrant community organizations that were running community gardens, local nutrition and farming educational outreach programs, a commercial kitchen, and a food pantry to improve nutrition and access to fresh food in an area that lacked full-scale grocery stores.