There has been a lot of fighting over how much money USG should spend to "solve" the current economic crisis. Positions have ranged from "a lot" to "infinity," reflecting highly substantive and scientific disagreements among mainstream macro-economists.
A quick examination of how much money has actually been spent/invested will demonstrate how USG actually works (and the absurdity of these policy ideas). Hint: if you’d been paying attention Congress or the President, you missed most of it.
So, how much money did USG spend on various programs to fix the economy? Start here:
The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.
TARP and the stealth bail-out put the total at $8.4 trillion of investments. Most interestingly, one of the presidents of the Federal Reserve banks didn’t know how much money was being spent – never mind Congress, or the public or anyone else. Behold, your government in action.
Stimulus II was another $800 billion, making the total $9.2 trillion.
We can add another $1.5 trillion for the various QE packages, making the total $10.7 trillion.
And let’s tack on an even $1 trillion for Fannie and Freddie (I think this is probably ultimately an underestimate), making the total $11.7 trillion.
There were a host of other programs, like TALF, TLGP, CPFF, money market guarantees, and dollar liquidity programs in Europe. It appears that we’ll have to spend another one trillion to bail out Europe in addition to whatever the IMF spends for us.
I’m sure I’m forgetting a couple programs. In total, it seems like a figure on the order of $20 trillion may be the actual amount spent/invested to "save" the economy. Most interestingly, we may never know how much is spent/invested. The vast majority of the spending will take place at the discretion of a few federal agencies and with virtually no Congressional or Presidential input or oversight. This is perhaps the most salient lesson from the crisis.
Keynesianism, by the way, is the theory that these sorts of programs work. Twenty motherfscking trillion dollars later, it’d be nice to see some more (or any) definitive evidence.