Why not give 1,000,000 US dollars to persons who filed 2007 tax returns to stop the financial crisis? Consumers would pay off the debts they hold from mortgages, credit cards, and student loans, etc. Those that wouldn’t pay off their debts, would be fools and would still default on their loans and obligations without such a loan anyway. With the rest of the funds, citizens will likely place the remaining funds in banks, ensuring the flow of credit through the system and liquidity for the banks. Paying back the debts incurred from years of personal borrowing will stimulate the economy and lead to more consumer spending. It will also likely raise consumer confidence beyond belief, and a small business will certainly appreciate the tax-free capital infusion. The plan also has the advantage of not rewarding the firms that have made mistakes.

Posted by Seth Halvorson, 12:41 p.m. Wednesday, October 1 2008 Permalink