The coronavirus pandemic has caused panic in the world of stocks. The Dow Jones Industrial Average has set 3 new successive records for the lowest point drops it’s experienced in years. Information being relayed to the public has had a profoundly positive effect on the market, and it shows. However, Wall Street has rebounded after each crash. This is due in part to keen awareness on the side of shareholders of moves being made by the government to handle the virus.
Many investors have found ways to cash in on the crisis with the help of financial companies like MarketWatch and The Motley Fool, among others. Certain United States representatives have also allegedly cashed in on the crisis. Unfortunately, their presumed methods of doing so were not tasteful.
Senators Richard Burr (R-NC), Kelly Loeffler (R-GA), Dianne Feinstein (D-CA), and Jim Inhofe (R-OK) allegedly dumped their stocks following a closed-door meeting in which they presumably learned market-sensitive information and used it to their advantage.
After claims were made, Representative Alexandria Ocasio-Cortez and others sponsored a bill to ban elected officials and their senior staff from trading stocks while in office. AOC’s bill is obviously extreme.
Senators should not be limited by their occupation to participate in the economy. To legally mandate as much would be an affront to the equal opportunity American capitalism claims to provide. However, the accused senators are not entirely correct in their actions. They allegedly acted on information not available to the public, creating an unlevel playing field of sorts in their favor.
This course of action is dangerous to the economy. The average shareholder’s decision to buy or sell is vital to the market, as America has learned through the Great Depression and the Great Recession. In the 1930s, speculation flooded the market, leading many to play the stock market. But, when only speculation exists in the market, not supported by hard facts, that speculation will cause major problems, manifested in Black Monday and Tuesday, where the Dow Jones plummeted from 301 to just 230.
Similarly, in the late 2000s, the government speculated that lowering interest rates would restore housing demand. This completely ignored the millions of homeowners with adjustable-rate mortgages, popped the housing bubble, and lead to the Great Recession.
Releasing sensitive information certainly wouldn’t be a difficult task. Comparing and contrasting statistics from Statista and Gallup shows that some, if not all, stock owners have access to the internet. Through the internet, the United States’ “information infrastructure” has never been stronger, and has allowed more people to be versed in current events than ever before. The government can use this infrastructure to their advantage. Perhaps they can release a public report with market-sensitive information while still holding classified briefings where less relevant information is discussed.
Unfounded speculation is one of the most dangerous forces in the stock market, and keeping market-sensitive information private can only lead to more unfounded speculation. This is why information, like the information discussed in the supposed closed-door meeting that caused six senators to allegedly dump their shares, needs to be released to the public.
The average citizen is the backbone of the economy and the backbone of the stock market. Without vital information that can affect the market severely on hand, the market cannot thrive.
The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.