@fify-- Thanks for the comment.
If I understand correctly, you are saying that increasing the money supply is not a bad policy as long as the government also puts in place some other policies that you mentioned.
So with my mortgage example, what did the government do wrong (or did not do) that resulted in this crises?
You also made a very good point with domestic goods. If foreign goods become too expensive for us to purchase, we should have alternative domestic products to take its place.
But I think that this is not very easy to do because, just as an example, not everyone wants to buy an American car. Some people prefer Japanese cars because they feel that it is better quality. So I don't think that consumers will be very happy with decreasing exports, even if it is very expensive to purchase. I think this is another reason why increasing the money supply is not a good idea.