Bailouts could cost $23+ Trillion... with a "T"

[Professor S]

Just to clarify, even at Iraq war spending highs under Bush military spending accounted for about 18% of the total budget. With the massive increase in domestic spending that number will likely be far less of a percentage.

Here is a graph to put things in persepctive:



Source: http://money.cnn.com/2009/03/20/news...ion=2009032016

And I've seen estimates higher than $2 Trillion for 2009 but I don't have time to find them at the moment. And thats real dollars, not allocated dollars that are mentioned in the initial post.

As for what this means, it means the same thing it meant under Carter: Printing more money = higher inflation. IMO, we've already started to this the results in the dollar cost for oil. Gas is more expensive, but it isn't worth any more than it was before... the dollar is just worth less.

Here is an interesting article from TIME's archives (1980):

http://www.time.com/time/magazine/ar...1854-7,00.html

[KillerGremlin]

[Bond]

Well, our debt to national GDP ratio is becoming quite high, but it is still not as high as compared to other countries, such as Japan and some African countries. The real problem is that this is an issue of path dependence. The more money the government prints at an alarmingly quick rate, the more the people become dependent on that government to do the same. It is a very dangerous cycle.

Moreover, this creates the same cyclical relationship that our economy has been undergoing for quite sometime. While Keynesian economics tries to even out the boom and bust cycle, it simply temporarily alleviates a bust into a semi-boom, but then sets the stage for the next bust.

The core problem is that these kinds of economic issues morph into political issues, in which the "correct" economic decision is rarely made. But that's how politics works I suppose.

[Angrist]

Could anyone please explain me what is meant with bailout? Thanks.

[Professor S]

Search for "bailouts" at the top of the forum. There are at least 20 thrads dedicated to the subject since September `08.

[Angrist]

Ah, it's the plan to get the housing market back up again? Or something to do with that.

That's a lot of money.

For a while I thought it was about the money that the USA owes to (3rd world?) countries.

[Professor S]

Originally Posted by Angrist

Ah, it's the plan to get the housing market back up again? Or something to do with that.

That's a lot of money.

For a while I thought it was about the money that the USA owes to (3rd world?) countries.

1) The third world owes the US money, not the other way around. We owe China a ton of cash.

2) Everything is connected. If the housing market was isolated, this severe recession likely would not have been as bad. Instead, mortgages were essentially sold as stocks, and when the mortgages proved to be bad, the effect was systemic to the economy as markets plummeted and insurers could not afford to pay their commitments to the financial institutions as they all went belly up at the same time.

[Angrist]

Ah ok, well, that's why I put it before a question mark and in brackets.

I think my country owes a lot of poor countries money.