Thursday, 2 April 2009

Frankly frightening

This is frankly the most frightening thing you're going to read this week [hat tip Gus Van Horn]:
 Financial Rescue Nears GDP as Pledges Top $12.8 Trillion
The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation's gross domestic product was $14.2 trillion in 2008. [bold added]
See, this is why all the loons are calling on the G20 to enact a "globally coordinated recovery plan": because if their currencies all go down the toilet together, it's less obvious.


  1. Holy hell. I am lost for anything else to say.

  2. Results of G20 meeting just in this morning.

    1/. More stimulus inflation (trillions of dolars of money printing).

    2/. More regulations directed against individuals (limits on pay for private company staff, attacks on so-called tax havens, removal of "right to silence", more powers expropriated by govt departments to "stabilise" markets, etc.)

  3. I've got two bushels of corn, a goat, a washing machine, three bedspreads, a bottle of 1990 Chateauneuf du Pap and two used left foot socks.

    Anyone want to swap for a house?

  4. Actually, the number is potentially $24 trillion.

    But a lot of this is really a transfer of balance sheets from the private sector to the public sector. New liabilities (within the economy) aren't necessarily being created.

    Also, the size looks big compared to GDP because GDP is an incomes/expenses based figure. It is similar to comparing the size of numbers on a balance sheet to the size of numbers on an income statement. The balance sheet numbers will always look big in comparison.


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