I’m normally against allowing the federal government any new tools, but I think this could be a reasonable exception. Here’s an explanation of the technique.
As long as you have good intel and a big enough pile of money, (which the feds will absolutely have) you can’t lose. Either run a sovereign wealth fund operating on this principle or sell bonds to allow the citizens to gamble on it.
This would effectively give the stock market an active immune system at a profit. The taxpayers (or bondholders) win, and white-collar financial terrorists lose.
Sure. The actual rule change would be allowing the executive branch of the federal government to directly buy stocks, either with a sovereign wealth fund or with bonds, under very specific circumstances:
They know someone is performing a naked short
They know the people performing the short are badly leveraged
The issue that still needs worked out is what they do with those stocks once the squeeze is over. We don’t want government stooges appointing board members, so it has to end with selling the shares, but of course if you sell too early, you won’t do maximum damage on the people who tried to short the company.
There’s already at least one post here calling to ban naked short selling. I’m pretty sure I voted for it. I see nothing wrong with considering multiple solutions, though.