I have been thinking, since the Great Recession, about strategies to divide the economy so that a failure in one section will not roll over into other sections, and so that financial stimulus can be applied in a targeted manner, without creating bubbles outside of the areas that are flagging. Most ideas have had practical difficulties for implementation, but I feel like a new one might at least be decent enough to throw to the hounds to tear apart.
- Define specific industries (tech, real estate, etc.)
- Any banking organization within the country must either divide into separate entities that are industry specific or divide their accounts in a non-cross-pollinating manner into industry specific segments.
- The Federal Reserve will divide the interest rate into industry specific interest rates and manage them separately.
- Any business may seek a loan for any type of industry. However, these loans will be reported to the government, and the government can freely ask the business to demonstrate that the majority of money from that loan was spent within the sector that the loan was taken out of. E.g., a loan for $100k in real estate would require that you have spent $50,001+ in real estate within a 1 year period of taking the loan. Failure to do so will grant the bank the right to increase their interest rate on that loan by 1.25x (e.g. 8% -> 10%) and the government will raise the business’ tax load by +5% (e.g. 15% -> 20%) for five years.
Obviously, point 4 will be the one where things are liable to fall apart.