I just had one of those wacky ideas that might not be too wacky to work, so … why not post it on the Internet?

Everyone talks about the stock market, but no one talks about the credit market—at least until now. Why? The bond market is difficult to understand, because you’re lending money for a return on the investment, and sometimes you borrow money to lend it. It’s counter-intuitive in how the pricing works, etc. It’s wacky.

Anyhow, every economist worth their salt argues that what worries everyone is the credit market; the stock market just goes where it goes. [To wit: the credit market has been seizing up for weeks, while the stock market has only just now started to really, really tank.] So if fixing the stock market takes fixing the credit market, let’s really fix the credit market—not by an infusion of taxpayer cash, but true capital.

Where do we get that capital? 401ks. Everyone is aflutter over how 401ks are evaporating in value, which … well, yes, that’s what paper wealth does, people. It fluctuates until you liquidate your assets, unless you’re the cautious sort that only buys blue-chip, dividend-paying stocks. Otherwise, it is a big gambling market—that your investment allows capitalization of the company you’re buying stock in, which allows them to make more money. Until they’re paying you a dividend for the shares you own, you’re simply betting that, down the line, someone will value your investment more than you did when you bought it. This is the Greater Fool Theory, and at the end of the day, someone loses. [As long as it's not you, though, who cares?]

Anyhow, folks are worried about losing money hand over fist—again, paper wealth. So, let’s one-time, for 90 days, let everyone liquidate their assets, tax-free—ONLY if they buy certificates of deposit, T-bills, etc. You can only avoid the income/capital gains taxes if you capitalize the market or the government. Period. This floods the credit market with capital while letting the stock market tank. What happens then? The Warren Buffets of the world, the guys who buy for value and hold for a long time, they’ll go buy now-undervalued stocks. Flush with capital, banks will have money to lend companies—and with companies’ stock values in the crapper, that’s where they’ll get their capital, because selling their own shares of stock just won’t be all that appealing.

This fails all sorts of tests that I have for providing simple solutions to complex problems, and it might well be something I regret posting in the morning, but right now … seems like a half-assed good idea to me.