Housing Finance in the United States in the Year 2001

This paper proceeds as follows. We first identify the essential services provided by a financial system and then derive the characteristics of the system that would exist in a technologically advanced society unfettered by nonneutral taxes and regulations. Next we consider how taxes and regulations have shaped the existing American financial structure. Finally, we posit likely tax and regulatory changes and conjecture as to how technological innovation will further interact with these changes to alter the American financial system. Our basic contentions are that the tax and regulatory influences are eroding and that the system will eventually move toward the unfettered financial system described in the first section.