ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

What Can The Government Do to Stabilize the Market?

Updated on March 15, 2020
jackclee lm profile image

Before retiring, Jack worked at IBM for over 28 years. His articles have over 120,000 views.


I am not an expert in this field and I do not have any financial degrees or government titles. I am just an average investor with common sense. These recent ups and downs of the stock market and swings of over 1000 points are a sign of instability.

The causes of these instability is worries over the coronavirus and the long term impact on various companies. However, there are a few things that makes this swing worse than necessary.

- March 2020

What Can Government Do?

The government already has a few actions to calm the market. For example, there is automatic trade suspension when the drop is below 7%. However, this is just a temporary pause of 15 minutes. They can also affect the market by adding liquidity to the market, such as buying Treasury notes. They can also, through the Federal Reserve, adjust the interest rates up or down.

As we have seem this past week, all of them are not a cure for this problem.

Here are a few concrete ideas that will reduce volatility. I believe they will have more lasting effect on the stock market and make it better and fairer for all investors.

  • Stop margins - no more borrowing of funds to buy stocks
  • Reduce program trading or eliminate them. The speed of computer trading programs add to the volatility.
  • Stop options trading and shorting of stocks.
  • Minimize day trading
  • any investments vehicle should be open to all investors, no special privileges for the wealthy investor like hedge funds.
  • Allow the market to close for short periods in black swan events, such as 9/11, and the current coronavirus.
  • Do not use interest rates to affect market
  • Do not use QE or print money to affect market

General Principles

I will not get into details of specific policies on controlling the market and reducing volatility. I will state some general principles as they relate to investments and the stock market.

  • The market is a long term investment to raise capital so that public companies can have access to equity to invest and grow.
  • The stock market should strife for fairness, such that all investors large and small would have equal access to all investment vehicles including stocks, mutual funds and hedge funds.
  • No companies should gain advantage by the speed of the network. HFT should be curtailed. There is no reason why the speed in milliseconds should allow a trader to gain an advantage. Just because our technology makes it possible does not mean it is good for the integrity of the system.
  • The market is not a gambling casino. It's main purpose is for investing and not for betting.

My Response to The Defenders of Current Policy

One policy of options trading is explained to me as needed to create efficiency and stability. This argument is never proven but assumed to be true. I challenge that assumption. It is just the opposite. This past two weeks of swings in the market of down 2000 points and up 1200 points of the DOW from day to day is an example of the failure of the current system.

I would suggest eliminating the trade in options for a few months and see the results.


In this volatile time, our government needs to play a role in helping to stabilize the market and not be an agent of more instability. When in doubt, it is better to slow down or even stop. Allowing trading in a free-fall environment only creates more fear.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Jack Lee


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)