Let’s see! The U.S. has so far borrowed/committed:
$141 Billion for last summer’s stimulus
$830 Billion for TARP I
$789 Billion for the Porkulus
I’ll use a base line figure of $600 Billion for TARP II — (it will probably be more, but I’ll be Conservative…) and we’ve committed about $3.5 Trillion to backing Fannie and Freddie
This adds up to roughly $5.86 Trillion.
Now divide $5.86 Trillion by 310 Million which is the current estimate number of every Man, Woman, Child and Illegal Alien on our soil and you come up with a quotient of approximately $19,000.00
If I got 4 checks for $19,000.00 (1 for every person in my house) that would equal $76,000.
Most people with families that suddenly came into an extra $76K would do at least some of -exactly- what I would do:
A) Pay off revolving debt and mortgage principal. B) Spend some of the extra cash that is not going to monthly debt service and save some of the rest . C) Look to upgrade my house or buy a bigger one.
Of course milage may vary depending on where people are in their lives and family situation….
The overall end effects of this would be
A) Re-capitalization of the banks through loan repayment/principal reduction/savings B) Job creation through a long term stimulation of spending — of CASH. C) A bottom for the tank home prices are in.
It also bears mention that such an infusion would “un-freeze” the credit markets.
The sudden burst of money supply would demand a roll back of the interest rate cuts to strengthen the dollar and prevent hyperinflation. The interest rate is the lender’s compensation for the risk of making and servicing a loan. Right now they’re too low to adequately compensate for the risk associated with ANY loan, particularly the really, really big dollar ones to corporations — which virtually none of them now have the wherewithal to obtain since they are all bleeding earnings.
A steady increase in rates as people begin making use of all this money would also give back to the Fed an important monetary tool (the rate throttle) and finally give lenders incentive to lend again.
….Depression averted!
Now, now!!! Did we really need to take 10 years off the life of poor old Turbo Tax Tim?
See how easy it can be to solve really difficult problems when you are actually working for solutions instead of pet projects
I don't disagree with your conclusion,
6eorge Jetson Thursday, February 12th at 11:28PM EST (link)but I think the (off-the-top-of-my-head) back-of-the-envelope calculation would be framed more properly (not every $ quoted on TV counts equally) as follows:
TARP I Phase a $150 B ($150 B overpayment for taxpayer claims on risky $350 B of future cash flows
TARP I Phase b $250 B (IMHO, the shenanigans/giveaways under Obama will be worse,)
TARP II $600 B (Seems reasonable. Σ TARP = $1 Trillion)
Stimulus 2008 $141 B
Porkulus 2009
• Spending $500 B for “All Sales Final purchases of goods and services)
• Tax Cuts $300 B
Fannie/Freddie
• $200B losses on $1 Trillion mortgage portfolio purchased by Fannie/Freddie on borrowed money
• $700B absorbtion of private investor losses on $5.5 Trillion of MBS issued (pooled and securitized) and guaranteed by Fannie/Freddie
The economic losses borne by the tax payers (in red) sum to $2.5 trillion
Unfortunately, there’s also a hidden cost of inevitable continuation of Porkulus spending components. That might be just as big as the entire $2.5 trillion unless conservatives can CUT the govt programs that will be initiated by the Porkulus.
Ummm…Who Threw Stuff Out?
One problem with your analysis is...
DONTREADONME Thursday, February 12th at 11:34PM EST (link)giving everyone $76,000 would mean my savings now would be worthless because the money is worth nothing. See the DuckTales episode that shows what happens with free money. The only dollar worth anything is the one you earn, that is the dollar worth something. Free Money=Hyperinflation! That is why both methods of Porkulus and giving money to everyone would give the end result of Hyperinflation.
“The UN is right? you can’t be any more “un”; Than you are right now, the UN is undone, Another mushroom cloud, another smoking gun, The threat is real, the Locust King has come, Don’t tell me the truth; I don’t like what they’ve done, Just give me ammo for the United Abominations”-Megadeth
RIGHT on, DONTREADONME
6eorge Jetson Friday, February 13th at 12:09AM EST (link)It would be a transfer of economic value that has to come from somewhere.
A US Dollar is worth a dollar only because the US Govt says it is. How does the govt get away with that? We the citizens accept and take for granted that the dollar can purchase real goods & services and hence serves as a medium of exchange. (E.g. “How much car can I get if I sell my boat.”) Let’s call the dollar the transitive property real claim (TPRC).
Now the govt has the ability to print money, which in essense is granting itself a larger pro-rata share of the TPRCs on current real assets. The govt also has the ability to tax, which transfers existing TPRCs from the private citizen to the govt.
Thus, technically, it would be possible to grant $76,000 TPRCs/family today w/o incurring inflation IFF the govt issued govt bonds (i.e. IOUs for TPRCs on future labor, goods & services) and the public believed that those IOUs would actually be honored by the return of those TPRCs via future bond paydowns sourced from future taxes.
So revisiting my first sentence, it has to come from somewhere. Either the dilution of TPRCs today (printing money) or from our children’s labors (taxed TPRCs) in the future.
Ummm…Who Threw Stuff Out?
Ah, Ahhh, Yes that was what I was trying to say...
DONTREADONME Friday, February 13th at 12:20AM EST (link){Puzzled look of absolutely no idea what I am talking about} No I get what you are saying, your version definitly sounds more intelligent.
“The UN is right? you can’t be any more “un”; Than you are right now, the UN is undone, Another mushroom cloud, another smoking gun, The threat is real, the Locust King has come, Don’t tell me the truth; I don’t like what they’ve done, Just give me ammo for the United Abominations”-Megadeth