Two Trillion Dollars

That's Two Trillion Dollars, with a 'T'. USD 2,000,000,000,000. Were that much handed to every man, woman and child in this country, it'd be roughly $6500. Handed to every one of the 14.5 million people currently listed as unemployed, it's roughly $138,000. Each. That's how much money the Federal Reserve Bank of the United States has 'lent' to bankers so far since this whole disaster started. Seriously. Well, that's how much, approximately, they think, might have been lent, as one of their functionaries has told us that her office does not even know how much has been lent and to whom.

So, who cares, right? They're fixing the economy. At least they're doing something, right? Wrong. Aw, heck, if you've been reading this blog, you knew that was coming.

If they'd given each jobless person, say, $100,000 to do whatever he liked with, they'd go a lot farther towards 'fixing the economy'. Giving it to bankers has done essentially nothing. The banks haven't been lending that money; it merely kept them from ruin. That's the truth of it.

The average person does not have unlimited ability to draw on a line of credit like the US government does. It can't simply print money to cover losses like the fed does. The average person is now looking at cinching up their belt and hoping one of the two wage earners does not lose their job, and, if they do, then they simply have to cut services. There is no other way.

But not the fed. Not the US government. The US government is running something like a 50% real deficit. This isn't the imaginary 'budget' deficit, which is a pretty number based on the approximations if nothing happens and all is rosy. The real deficit includes stopgap spending for the war effort, the various bailout packages and so on. It does not include the above two trillion dollars. Add that in and the actual deficit goes north of the budget. Yes, folks, we stand to spend over twice what we make this year, if true accounting were taken.

But, it's all saving the economy, right? I mean, if it helps, even a little, it's worth it, right? Wrong. Even if this whole spending money on credit were ever, and I mean ever effective at creating real growth, we'd still be stuck paying for it. The loans being taken out this year ought to push us over ten trillion in debt easily. Were the fed properly accounted for, we'd have passed that level years ago, as operations of the fed depend on faith in the dollar, which is, in turn, underwritten by faith in the US government. This means that either by greater production to sop up all that extra money or by increased payments directly to service debt, we will have to pay for this.

In other words, if they fix the economy, we will have to pay for the fix, and our children, and our children's children, unto the third and fourth generation.

Of course, if the dollar goes bust, then we won't have to pay, will we? We'll pay with a ruined economy in the short term, but won't have to worry about all those IOUs afloat on the world market. Now, I think we can see why bankers fear deflation so much. They want the middle road, the slow and steady inflation that makes their loans worth less but their assets worth more. Any deflation reverses that trend and they start to lose money.

So, when bankers run the country, inflation will be the rule of the day, even if it means pumping two trillion dollars into the economy in less than a year. I do believe Thomas Jefferson warned us about bankers, banking and letting the government be run by same. It is to our ruin we have not heeded his warning.