Arnold Kling of EconLog talks with EconTalk host Russ Roberts about the weird world of banking. Why do mortgages look the way they do? What do banks contribute to economic activity? How does regulation and legislation change the structure of what banks do? What would banks look like and the housing market look like if government were less involved? Kling discusses these questions and more including the hidden subsidies built into the current structure of the mortgage market. The conversation is an imaginative exercise in the microeconomics of finance and credit.
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