The Credit Crisis: What can be done through Government Policy?

There is no denying that the credit crisis in the United States is serious. In addition to effecting millions of individuals, this situation has caused issues with businesses all over the country as well. Of course, this is not to say that the government is sitting back and hoping that things get worse. They are looking for ways to fix the credit crisis, and have already taken some steps such as cutting key interest rates to record lows.

There are many opinions as to what the government can do in order to fix the credit crisis and better the economic state of the country. That being said, not every move is an easy one to make. Remember, fixing one thing can lead to issues in other areas so the government needs to be very careful about the choices they make.

Many people are of the opinion that fixing the credit crisis can be done by removing all capital gains tax. This is a drastic measure, but this is something that should definitely be considered if the government is serious about implementing policies that will bring the country back on track. By cutting capital gains tax investors from all walks of life will begin to put money into real estate and the stock market. Why would they do this, you may ask? Simply put, they will want to seek out tax free profits in order to put more money in their pocket. In the meantime, they will be doing their part in repairing the credit crisis and stimulating the economy.

Others feel that insuring mortgages and subprime bonds will help fix the problems. Simply put, any financial instrument that is US government backed will create a large market the world over. In turn, this will create immediate liquidity.

At this point, the government is trying their best to fix the credit crisis through a number of improvements including a large economic stimulus package. Some experts feel that this will help get things moving in the right direction, whereas others are not so sure. But one thing is for sure: the government has the ability to make the necessary changes in order to better the current situation.

The credit crisis has affected millions. While current government policies are starting to kick in, it is difficult to say how long it will take for things to start to kick in and change for the better. Only time will tell if the government makes more changes in order to address the credit crisis.