It says that the government should buy houses directly and instruct the Bank of England to print the money to pay for them, to form a floor under the housing market and provide much-needed liquidity to the economy.
It says the government already has such a programme in place, but it is too small to make a significant impact at a macro level, and is currently being funded by borrowing rather than through an increase in the money supply.
Fathom believes it is much simpler to value houses than credit default swaps as will be necessary under the current approach.
The MPF has been established to provide a rigorous, objective and constructive external cross-check on the Bank of England and its MPC.
It features a number of former Monetary Policy Committee members – Dr DeAnne Julius, Prof. Willem Buiter and Dr. Sushil Wadhwani – and its remit it is to challenge the orthodoxy which which has governed UK monetary policy since 1997.
Dr Julius, Senior Adviser at Fathom Financial Consulting, and founding member of the MPC between 1997 and 2001, says that we are approaching “the end of monetary policy as we know it”.
But she adds: “Alternatives such as quantitative easing bring new risks and no guarantees of success.
“The Monetary Policy Forum aims to make a constructive contribution to this debate, based on rigorous, impartial analysis provided by Fathom.”