If only it worked. Robin Hanson has a brilliant solution to stock market volatility:

Congress could give some well-regarded “best and brightest” regulators a big pile of cash, say $100 billion, and have them correct prices by trading, buying when they think prices should rise and selling when they think prices should fall. If regulators really do know how to choose good price pushes, then not only will they correct “biased” stock prices, they will increase their pile of cash, and we won’t need to give them any more.

If, however, regulators lose their pile of cash, let them come back to Congress begging for more, explaining how they had it all wrong before, but now they know when to push prices up versus down. And after very some public hang-wringing, let Congress give them another $100 billion to work with. And if regulators come back a few years later asking for even more money, explaining how they had it all wrong again, but now they know how to do it right, let Congress given them another very public scolding, along with another $100 billion.

And if regulators lose that pile, maybe Congress and the public will have had enough, and will quit the price fixing business. Fool me once, shame on you; fool me thrice, shame on me. The $300 billion will have been well worth it to clearly show regulator inefficiency, especially since that money would just have been transferred to financial speculators, the people who really rationalize stock prices.

Sadly, though, I suspect that many still wouldn’t get the clue.