What was at the core of the financial crash of 2008/2009? In a word: credit.
Hear me out on this… Banks were lending people money. This is money that the people didn’t have to begin with, but spent it anyway because of the culture that big banks created and marketed.
People then lost their jobs and were unable to pay their bills. Food and utilities got paid first, but mortgages, credit card payments, and auto loans/leases started being paid delinquently, if at all.
With credit cards (and lines of credit, including Home Equity Lines of Credit or HELOCs) no longer getting their monthly infusion of payments, but still paying out to merchants, things started to get bad – fast.
The government finally had to step in and give the big banks loans (even if the big banks didn’t want them, they were forced to take them).
My Novel Idea
Rather than loan the big banks money at the tax payers expense (which equates to even more money out of the pockets of those who need it most), why not refund the tax payers directly – with the condition that 100% of the money must first go toward paying down debt?
This helps the tax payers (it was their money to begin with) get out of debt quicker (ala Dave Ramsey) and helps the banks by them getting an infusion of cash when they need it most.
Those living frugally or not in debt (and good on ya, if that’s you!) would be required to put the funds into a savings account or investment vehicle of their choosing for a minimum of 90 days. This would also help the banks by giving them more liquid assets to be able to continue their business.
Of course it doesn’t matter much now, but it’s fun to muse with what could have been done with $1,000,000,000,000,000+, isn’t it?