Sunday, December 21, 2008

$5,568,000,000,000 UPDATED

In the event you still aren’t comfortable counting as high as the number in the title (as I'm not), it’s $5.68 trillion.

According to this article that’s the amount of money we have authorized to be spent to deal with the financial meltdown in this country. About $1.6 trillion of it has already been spent (according to my Fed banking friend, committed, not spent).

The U.S. GDP for 2007 was about $13.8 trillion, a little more than double the money committed (authorized) to save us. How does it take about 40% of what we produce in a year to do this?

At times like this I wish I had more than one micro-economics course and no finance course under my belt. I’m not used to feeling stupid; and, I don’t like it.

I have no clue, 1) what the hell we are doing; 2) why the hell we are doing it; and, 3) whether the people doing this stuff have any more idea what they are doing and why than I do. And, I REALLY don’t like that.


Sonja's Mom said...

I had a very hard time wrapping ny head around 700 Billion and now your talking about 5.68 Trillion! Good God - do we really have that much money. This is very scary.

dr sardonicus said...

My knowledge of economic theory is slight; here goes my best guess:

1. Banks have spent most of the last two decades loaning out money that didn't actually exist.

2. Creditors are starting to find out they weren't ever going to get paid.

3. The Treasury is now playing catch-up, printing money to cover all the loans. Government and Wall Street have decided that inflation is the least of the various possible evils.

Lifehiker said...

Well, Dave, I think Dr. Sardonicus hit the nail on the head. The government is printing money and using it to bandage the economic wounds that recently began to fester rather nastily. Inflation could be a result. At a minimum, us taxpayers are on the hook for a lot of money. Not a good thing.

But, most reputable and non-aligned economists think these actions are necessary to stave off an economic meltdown of historic proportions. The jury is still out on whether or not they will, in fact, work. I hope they do.

The "why we are in this ugly situation" stinks. Lots of Americans and American corporations either sold or bought really bad investments. The same things happened in other countries as well. If you believe that "regulators" should have stood in the way, you're probably right. But, you've got to admit that lots of people hate being told what they can or can't do with their money.

I think there's still a good chance the American economy will go into free fall in 2009. Let's hope all these government actions slow or stop the bleeding.

Jeni said...

With respect to not understanding what's happened, what's happening, you definitely are not alone, Dave! I have an excuse though, not bright enough to comprehend economics -except my own and even those baffles me. But then too, I really don't believe even those who are supposed to be the financial wizards have a clue, or not much anyway, either!
Oh, my word verification here is "outwicif" -hmmm -almost like "outwit" isn't it which could be considered maybe prophetic to this post considering the huge investment scam revealed last week!