Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Elegant Market-based Solution to the Financial Crisis

Personal_Finance / Credit Crisis 2008 Oct 17, 2008 - 05:22 AM GMT

By: David_Haas

Personal_Finance Best Financial Markets Analysis ArticleTHE PROBLEM: In a strange and awkward way, some of us here in the mezzanine have experienced a rather morbid and dark sort of enjoyment as we watch those on stage who created the world-altering credit crisis, and the governments who enabled it, squirm and writhe - like a child caught in his first big lie - as they attempt to sort out the consequences of what they've done. What we see from our vantage point is, instead of coming clean, they continue adding layer-upon-layer of ever-glossier, ever-less-credible volumes to their original prevarications. In my opinion, this is EXACTLY NOT what the world needs right now.

The frustrating part for those of us who pay attention is that we know we're all on the same big ship.
In our souls, we deeply fear that we've just slammed the massive-blue-iceberg-in-the- night; our ship is screeching, tearing, moaning, and listing; the slushy waters we're heading into here in the wee hours of morning are dark and shark-infested; and, most fearsome of all, the lifeboats may be few. As we all know, fear is a most-powerful motivator and millions of people have been dynamically motivated by recent events to grab their money and run. Fear is also highly infectious and travels especially rapidly in today's interconnected world. As I was just reminded by a reader, “what we have to fear most is fear itself”.

Maybe I'm being (a little?) dramatic, but I write this commentary based upon numerous conversations I've shared with a broad cross-section of people over the past few years. By 2005, I began noticing that these “everyday folks” were beginning to sense that things had, for reasons unknown, gotten “way out of whack” and that something major was about to happen. Some feared it might be another terrorist attack. Others were more certain it would be “of a financial nature” but they just weren't sure where it might originate. Now that we know where some of the largest problems had been festering, we're experiencing a collective state of shock as we watch our “leaders” seemingly grabbing one straw after the next, hoping “this next great solution” will be the one that catches hold and enables the markets to begin to firm up, regain confidence, and move forward once more. We are all overdue for this collective sense of relief.

At the risk of stating the obvious, why can't a single one of these prominent leaders see that what we're really suffering is a crisis of confidence? Why isn't it painfully obvious to them that the money problems are merely a symptom of the root-cause, which is LOST CONFIDENCE? As if it's all they know how to do, these political and financial titans continue throwing mountains of money at a problem that cannot be solved with more money which, of course, really means debt. It's like trying to remove a hex-bolt with a philips screwdriver - ineffectual, wrong tool for the job.

What they need to do is have a catharsis - a true and convincing cleansing - and a plan to address the worsening psychology of the crowd. If they won't do it voluntarily, the markets will surely force their hand. They need to set about SYSTEMATICALLY REBUILDING TRUST. The recipe for this is simple: Restore our confidence and our money will follow. Obviously, this kind of “simple analysis” is monumentally hard to do when lofty educations, multi-lettered credentials, and hardened egos are at stake. To be fair, Ben Bernanke may not have the world's largest ego but his handlers - the policymakers - most assuredly do. And so we continue flying in the fog.

The problem is, these leaders just don't get it. They fail to understand that we no longer have confidence in them, let alone their ever-more-complex “plans” to spend our money and their “shiny new initiatives to stabilize markets” with billions, then trillions, then “virtually unlimited amounts” (that's the last figure I heard) of our future tax money. Don't they see that they're slipping down the slippery slope tearing out the underbrush as they go? Can't they simply look out the window and see which direction their bus is moving in? These helm-holders seem to forget that we work hard for this money they so cavalierly throw from helicopters and blast from water-cannons (figuratively speaking, so far).

With each news conference, each closed-door weekend meeting, and each predictably-hopeful “evening report”, the handlers confirm more positively for each and every one of us that they've forgotten just whose money it is they're spending and whose futures their decisions are encumbering. Bottom line is, we all know that it's our money they're throwing around. They have the credit card, we pay the bill. And that's why the working man isn't buying it - or much of anything else for that matter. They've lost our confidence and we're all feeling the damage in our very own pocketbooks. So what does the common man do to exercise a little control? Naturally, he's had to stop consuming - which leads us ever further down the dismal path of deep recession, or worse. This is the self-fulfilling prophecy that, if left unchecked, spawns recession, then depression, then either deflation or hyperinflation as a final resolution. THIS IS THE CYCLE THAT MUST BE BROKEN NOW.

So, rather than beat this dead horse further and play another inning in the blame game, today I intend to publicly offer my uniquely simplified version of what I see as a potentially effective, grass-roots, market-based solution to the credit crisis worldwide. Appropriately, my solution starts right here in the good ole USA where much of the problem began. .

First, a little background. One morning last week I awoke from a restful sleep and confidently announced to my wife that, overnight, I had developed a simple solution to the credit crisis while I slept. This didn't seem strange to me because I've learned in my nearly 49 years on Earth that many of life's serious problems are solved while we sleep. Perhaps it's because we can truly “let go” when we sleep that our true mind - our subconscious mind - can get into gear without the interference and incessant, distractive chatter of the ego and set about crafting a practical, emotionally-detached solution to the problem it's presented with.


In the yin and yang symbol there is black melded into white, representing darkness and light, evil and good, problem and solution. Upon observation, one sees a single spot of black on the white field and vice versa. To me, this would represent the “seed” of light found in darkness or the seed of darkness found in light. By this logic, if darkness represents the problem, then the seed of the potential solution can be found somewhere within that which caused it.

Aside from the mass psychological basis outlined above, a major contributing factor in the lack of trust in the financial system is that savers have been consistently penalized for saving since, at least, 2001 . Any economist knows that personal savings is the bedrock that investment and capital are founded upon.

Obviously, credit markets rely on people who save their money. Knowing this, why would we continue to insult and abuse those who hold the true power to resolve our current crisis; the savers? Instead of this direct approach to solving our crisis - rewarding savers - our leaders have gone in the opposite direction. Through their actions, we've exponentially increased the rewards for debtors, absolved them of their debts, and specifically avoided holding any of them responsible for their prior acts - while, apparently, handing them the spoils (ownership) of the entire game-board they just lost on. Somebody please check me if I'm wrong here but aren't the biggest banks presently taking ownership (with government money) of the entire world financial apparatus? Are these same banks not…oh never mind.

Here's how we fix the problem from the grass-roots where, I firmly believe, the only lasting, workable solution can ever come from. First, we need to re-capitalize the banking system from the bottom up (as opposed to the top down) so that it can repair it's hungry balance sheets and itself become confident enough to begin interbank lending again. To accomplish this, WE NEED TO GET SAVERS TO BOLDLY MOVE THEIR MONEY INTO BANKS AGAIN. This re-capitalization, in my view, should NOT be a function of government!

How can we accomplish this? That's simple too. We begin paying savers not just a good but, in fact, A VERY STRONG AND HIGHLY ATTRACTIVE RATE OF INTEREST on their money. Why not use the bloated “bailout war-chest” to subsidize savers for a change? Money would quickly flood back into our banks if for no other reason than to seek the reward of a strong rate of return without risk to principal. As part of our confidence rebuilding plan, we would also extend the government (FDIC or Treasury?) guarantees to whatever amount of money a saver/investor wishes to deposit. Rest assured, seeing credible evidence that confidence had been restored, money would come from around the globe seeking a safe, high rate of return. Voila! A true, market-based rescue plan.

Where would the money come from? For many years, people have marveled at the huge spread between the interest rates charged on credit cards (especially if there's any impairment on the borrower's credit rating) and the interest rates paid to depositors in the very same institution. Banks have been brazenly greedy and have refused to pass on even a sliver of the profits they raked-in from this spread. Rates being charged to borrowers often run up into the double digits and, for many people, peg themselves up against state usury limits. For some people, these interest charges can reach levels in the range of 30% to 40% per year based on what I've read.

Do you think capital would form quickly inside an institution offering government guaranteed savings accounts yielding 30% PLUS per year? I think the mood of the country, in fact, the world would change in the blink-of-an-eye if a solution like this were put forth and this problem, despite its massive scale, could be quickly and positively solved.


As I imagine it, my solution would accomplish several things:

1. It would quickly infuse massive amounts of capital back into the banking system and fatten up institutional balance sheets rebuilding public and inter-institutional confidence.

2. It would put a great deal of discretionary interest income back into the hands of savers (a group that has been punished long enough) and offer irresistibly strong rewards for saving .

3. The majority of today's savers tend to be members of older generations who have accumulated their wealth over many years. This strong new source of interest income flowing into their households would take a tremendous burden off of them and their families, and greatly improve their outlook as well as their quality of life in retirement.

4. Much of the interest earned would be spent or re-invested directly into our domestic economy. This would, of course, create domestic jobs, ease unemployment and the increasing demands on the social safety-net, and improve the social mood AS IT INCREASED TAX REVENUES TO PAY DOWN DEBT at the local, state, and federal levels.

5. It would likely lead to a substantial government revenue increase without a growth-threatening tax increase!

6. It would get rid of the temptation for governments to further increase the indebtedness of future generations to unsustainable levels by continually throwing massive amounts of money we don't have at a problem that can only be solved with LESS DEBT, not more.

I will stop right there because all I'd intended to do with this post was to “float” my idea out into the realm of possibility through cyberspace. I'd love to hear feedback and entertain others' informed opinions of why this idea is or is not workable. Maybe it can serve as a starting point in a worldwide discussion. Perhaps, if nothing else, it will provide a new and “hopeful” direction that is at least a little bit more fresh and insightful than what we keep seeing emanating from the smoky halls of government and the creaky towers of finance. After all, they've delivered us to where we are and I sense it will, ultimately, be up to we-the-people to deliver the solution. I've thrown my hat in the ring. Let's see some others gain the courage to stand beside me and do the same.

For more interesting reading on a variety of topics please visit:

    By David Haas

    In my consulting practice, I work with individuals, business owners, and professionals.  I assist business owners and professionals in several critical areas ranging from business start-up, marketing, operational challenges, employee retention, and strategic planning to personal asset protection, financial, and retirement income planning.  Often, these areas relate and need to be integrated to work most effectively.  I also assist business owners in developing exit-strategies that enable them to maximize the value of their business interests and preserve their lifestyle in retirement.  For individuals, I primarily focus on tax reduction, financial, and retirement income planning.

    © 2008 David Haas, Consultant

    David Haas Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Keyur Patel
01 Mar 09, 16:11
Boosting production and consumption

Just a thought-

Everyone who works has to pay taxes right. Obviously if we werent taxed on our income, we would work more, hence put in more hours, resulting in more goods being produced, and prices coming down as supply would increase.

However that would not be feasible as the governement relies on such taxes. So instead.....

Why dosent the governement start new policy whereby workers who work overtime get full tax exemptions. Usually overtime workers get paid time and a half, BUT STILL THAT IS TAXED!!!

Why not exempt the hours worked overtime from tax completely.

This would mean people would want to work overtime, BUT, will have to work normal hours first in order to get to the overtime and then from then onwards every hour they clock in will be tax free.

More people will be willing to work longer, resulting in an increase in production of goods and services. Spending or savings will increase as prople will have more disposable income from lower or no taxes accrued from working overtime.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules