> I know what the textbook says; I'm talking about the political realities of pursuing a policy that would cause a precipitous value in people's homes.
The political reality is that the Fed has fairly consistently -- and reasonably predictably by experts looking at the same signals that the Fed overtly claims to watch -- made rate decisions as one would expect considering the combination of employment-related and inflation-related considerations they consider under the "textbook" case. So, conspiracy theories about home prices are unnecessary.
> True, the Fed is nominally Independent, and Immune to Political Influences, not in practice it's not.
I won't argue that the Fed is someone subject to political influences, OTOH, those strongly militate both for working to promote employment and working to constrain inflation, which are also the Feds overt mandates.
> The bankers that contribute to its policies also have to worry about mortgages going underwater from a return to historically normal rates.
After the 2009 crisis, the wave of defaults that occurred then, and the tighter lending policies that banks have taken since, there's not a huge risk there.
