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What exactly am I getting for my $24,000?

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November 25, 2008 – Comments (13)

 

After ranting about the disgusting amount of money that the U.S. government is flinging all over the place earlier today, I came across an updated total of approximately how much it has spent, now including the Citigroup transaction (but not today's announcement).  Ready for this...$4.6165 trillion dollars!!!! 

Barry Ritholtz provided some perspective on just how much money this is over on his Big Picture blog this morning.  Adjusted for inflation, here is the cost of some famous events in history that the U.S. government has shelled out for:

Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

Add all those HUGE events together and they still cost $686 billion less than what the government has shelled out to banks and other beggars thus far...and the spending seems to be accelerating, not slowing down.  Heck, adjusted for inflation this bailout cost more than the entirety of World War II (only $3.6 trillion, adjusted for inflation)!

While WW II was terrible, at least the money was spent on manufacturing stuff, which created jobs.  What in the heck are taxpayers getting for their money now?  Oh that's right, we'll probably get most of this money back eventually and will even turn a profit on these "deals," which are much worse than those that investors like Warren Buffett are getting.  Sure.

The unbelievable thing is that no one can even keep track of how much money the government is printing.  Bloomberg estimates that it is much higher than the aforementioned number.  It ran an article stating U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit

That's equivalent to $24,000 for person in the entire United States.  The irony of this whole thing is that if the government had just handed a check for even half that much to every man, woman, and child in the country instead of doing who knows what with it the economy would probably actually be in better shape. 

I can see it now, someone dressed up in an Uncle Sam suit could drive around from house to house handing out giant checks like they do for the Publisher's Clearing House sweepstakes.  There would be balloons, confetti, etc.  The resulting excitement would cause consumer confidence to soar.  Heck even the process of giving out the checks would create jobs.

At least this stupid idea would have stimulated a lot of consumer demand for cars, housing, jewelry, etc...  Of course, doing that would have been perceived as stupid, but our genius leaders at the Fed and Treasury have been throwing the money down a big black hole instead.

Deej

13 Comments – Post Your Own

#1) On November 25, 2008 at 3:02 PM, MarketBottom (29.30) wrote:

Extended terms

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#2) On November 25, 2008 at 3:14 PM, steve3333 (29.62) wrote:

Lets not forget these trillions have been spent in a very short time-frame.  Except for the Lousiana Purchase, most of your examples have taken years to reach their total cost.

What scares me most is with all this money being thrown into the system, where's the inflation?  It does not exist because this problem is so much worse than anyone wants to admit.  I feel we're on the precipice for another great depression - amazing that they created the Federal Reserve to try to end the booms and busts, but not only do we still have them, the busts are far worse and the disparity between rich and poor continues to increase.

Great blog!

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#3) On November 25, 2008 at 3:41 PM, XMFSinchiruna (27.48) wrote:

Hey Deej, great post, but I'm afraid the total is far larger than $4.6 trillion. I will publish an article tomorrow with an independent analysus pegging the tally much higher. Suffice to say it is MUCH higher than $4.6, so suspend your outrage until tomorrow when it can be properly apportioned.  :)  I'll come back here to your blog and post a link when the article appears.

I really like what you did with the comparisons!!!

Fool on!

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#4) On November 25, 2008 at 5:33 PM, Eudemonic (64.56) wrote:

Of course Hollywood has already made a movie about this: "Pennies from Heaven".

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#5) On November 25, 2008 at 6:19 PM, TMFCrocoStimpy (93.85) wrote:

Methinks Obama's campaign slogan:

Change we need!

will be slightly modified to for the treasury:

We need change!

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#6) On November 25, 2008 at 8:47 PM, abitare (76.73) wrote:

TMFCrocoStimpy,

Funny.

Good post, good find from the Big Picture.

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#7) On November 25, 2008 at 10:53 PM, Tastylunch (29.33) wrote:

God, I want to vomit. Maybe I should just emigrate and be done with it.

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#8) On November 25, 2008 at 11:16 PM, Tastylunch (29.33) wrote:

Deej only found onebook so far about the Long depression

Jay Cooke's Gamble: The Northern Pacific Railroad, The Sioux, And the Panic of 1873

by M. John Lubetkin

 

haven't read it yet myself. Can't say if it's any good

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#9) On November 26, 2008 at 11:58 AM, outoffocus (23.20) wrote:

Throwing money into a giant hole...

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#10) On November 26, 2008 at 12:08 PM, kdakota630 (29.69) wrote:

Critics are raising concerns about the "transparency" of the federal bailout now that the Federal Reserve has promised to lend banks a total of more than $7.7 trillion, an unprecedented intervention in the financial system not seen since the 1930s.

The rising total increases the systemic risk faced by the U.S. taxpayer, experts say.

The biggest risk comes from rescuing firms that are seen as "too big to fail," William Poole, former president of the Federal Reserve Bank of Saint Louis, told Bloomberg News. "No question there is some credit risk there," Poole said.

The government has publicly promised $2.8 trillion, including the Troubled Assets Relief Program (TARP), which was approved by the Congress on Oct. 3.

But the Federal Reserve began to purchase $2.4 billion in commercial paper, or short-term notes, which companies rely on to pay bills, on Oct. 27. The Federal Deposit Insurance Corp. (FDIC) then promised $1.4 trillion to guarantee interbank loans on Oct. 14.

Earlier this year, the government promised $29 billion for the takeover of Bear Stearns by JPMorgan Chase & Co. and $122.8 billion for insurance giant, American International Group (AIG).

Just this week, Citigroup obtained $306 billion in government guarantees to buy bad mortgages and other so-called "toxic assets." Then the Treasury Department said it is infusing $20 billion into Citibank, as a result of its stock falling 60 percent last week.

There are also other financial risks that need to be considered.

"The thing that people don't understand is it's not how likely that the exposure becomes a reality, but what if it does," Rep. Darrell Issa (R-Calif.), a member of the House Financial Services Committee, told Bloomberg.

"There's no transparency to it, so who's to say they're right?"

The funds that are being pledged are truly eye-popping, now approximately $24,000 for every person in the country. That is "nine times what the United States has spent so far on the wars in Iraq and Afghanistan, according to the Congressional Budget Office (CBO).

By contrast, the bailout of the savings and loans in the 1990s cost $209.5 billion. The U.S. bailout of Chrysler Corp. in 1979 cost $4.2 billion.

The bailouts are expected to continue to grow in scope during the next presidency.

During his radio address on Saturday, President-elect Barack Obama said that his economic stimulus plan "will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy."

Some are urging restraint and caution, however. Former Treasury Secretary James Baker, appearing on Meet the Press, said the economy was facing difficulties in the early 1980s, but, with President Reagan as a free market advocate, he recommended that the car companies and banks downsize, and reposition themselves, to compete, globally.

"I had a lot of car companies banging on my desk as Treasury Secretary," said Baker.

© 2008 Newsmax. All rights reserved.

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#11) On November 26, 2008 at 12:39 PM, amoldov (31.56) wrote:

I don't believe it! Then Lenin was right.

He said "do not worry comrades, if things get really tough, we'll buy rope and sent it to the capitalists to hang themselves". At which somebody asked "Vladimir Ilyich, where will we get the money to buy enough rope to hang all the capitalists?" Lenin replied "do not worry, they will lend it to us".

To answer your question, TMFDeej, for your $24,000 you're getting enough rope.

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#12) On November 26, 2008 at 7:03 PM, XMFSinchiruna (27.48) wrote:

Here you go, Fools. My tally is $8.6 trillion:

http://www.fool.com/investing/international/2008/11/26/39-trillion-was-a-drop-in-the-bucket.aspx

Or $28,119 per person in America

 

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#13) On November 27, 2008 at 3:26 PM, cbwang888 (25.49) wrote:

Only solution to this that I can think of:

Open the gates of immigrations and let riches of the world coming to live in US and share our pies ...

 

 

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