That's A Lot of Money

The current economic crisis we are experiencing is indeed unprecedented. What is interesting is to understand in what ways it is unprecedented. There is no way to know if this crisis has reached an sort of bottom, but we do not have the 25% unemployment of the Great Depression, or near the collapse of manufacturing, in every way this economic crisis is not as bad as one has been before. What is unprecedented is the monetary expenditure the government has made in attempting to arrest the crisis. As of now the total expenditures made by the fed and government is $4.6 Trillion! I don’t think we realize how much that is. Jim Bianco of Bianco Research crunched some inflation adjusted numbers:

• 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

We have outspent nearly every major government expenditure. The only other expenditure that would tip the balance is WWII. It cost 3.6 Trillion inflation adjusted. Alone, we have spent a Trillion more than WWII on this crisis. Whether or not you think these expenditures are justified, what remains true is that this is an unbelievable expenditure of money.

I am not one who says that we should not have done anything. I do however take issue with the way things have been done. We are trying to avoid a serious depression, but we should not avoid that fact that recessions and even painful recession are often and some would argue always beneficial. They work out the imbalances in the economy, they liquidate investments that did not result in profitable production, and probably most importantly they are the risk that cautions unwise future investment. This entire fiasco we are experiencing was, in the end, the result of over exuberance and the disregard of risk.

Add to that the fact that the bailout money has been utilized with zero -- zero -- oversight:

“. . . no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.”

This is turning out like any government program that fails to utilize proper oversight. I’m no economist, but I do know that humanity’s timber is crooked especially in the proximity of other people’s money