I’ve been thinking about the “economic crisis” lately and have come up with such a simple way to solve it that it’s not even funny.
There’s 2 major issues in play: Yes there are more, but these are the 2 major ones. Fixing these will fix the others.
- Consumers & businesses need $ in their pocket so they can go spend it. A few hundred here and there isn’t going to do anything.
- The government can’t keep shelling out $ or it’s going to cause higher deficit we have to pay back - aka higher & more taxation in the future
The problem with any proposed solution including the current “solution” presented by the government is that it doesn’t fix anything. It’s just a band aid, and one that is way too small for the wound at that. It may slow the bleeding but what we really need is a tourniquet first and then cauterize the wound shut.
But how? Well, I have an idea:
My solution will:
- Put $ in every American’s pocket
- Put $ in the government’s pocket WITHOUT increasing taxes
- Create jobs and business spending
The government should force banks to modify all existing credit to aggressive interest rates in a manner that helps everyone and still rewards those who have been diligent in trying to keep their mortgages and other credit in good standing. This means a tiered scale based on your current credit score, but the point is that it needs to be aggressive across the board.
Example Proposed Mortgage Credit Rates:
- Excellent credit: 3%
- Good credit: 3.5%
- Fair credit: 4%
- Bad credit: 4.5%
- Horrible credit: 5%
Sure, the banks will hate it. Guess what - we hated giving them money which hasn’t helped anyone. Now it’s their turn. And we’re not asking for a gift, we’re asking for them to give us a helping hand when we need it. And I’m not talking for forever, but say a 3 year period - should be plenty of time to get the economy on track.
Here’s an example of what I mean:
- So, say the average mortgage is 8% on $300,000 financed
- Simple interest is 24,000 first year in interest payments
- At 3% that interest drops down to 9000
- $24k minus $9k = $15,000 back to the consumer
- $15,000 less tax deduction means you have to pay tax on that
- Assume 40% income tax bracket = $6000 back to the government in taxes
- Total $9000 in the consumer’s pocket from just this one loan modification
Now do the same thing with credit cards, car loans, equity lines, business loans, etc. Different interest rates for different types of credit of course. Imagine dropping some people’s credit card rates from 24% (which is outrageous! no wonder folks can’t stay on top of their bills) to say 12%. I bet this would eliminate the need payday loan almost overnight.
The result would be TENS OF THOUSANDS AFTER TAX DOLLARS in the pocket of the AVERAGE CONSUMER and similar benefits for businesses. Not to mention, that the government would get some quite large percentage of tax revenue also.
If the government gave you $10-30k per year for 3 years after taxes, would you be on board?
If so, leave a comment here. I will periodically auto-email the Whitehouse as people comment to let them know that taxpayers are on board for this help that we deserve!
Or maybe you have a better plan? Or reasons why you think this wouldn’t work to kick-start consumer spending, business profits and stopping layoffs and unemployment.
I’d love to hear your views in the comments.
