Federal Rescue: Unthinkable Trillions

I enjoyed this chart from the Atlantic. Here is the Atlantic’s description of it:

Here’s a pie chart that puts into perspective the size of the Fed’s involvement in the financial crisis. The entire circle represents approximately 8 trillion dollars. Yes, $8,000,000,000,000. The blue quadrant represents federal lending including expansion of swap lines to the tune of about $2 trillion. The purple quadrant comprises housing related purchases ($1.45 trillion) and buying $1.8 trillion of commercial paper. You can see a more itemized breakdown here…

Source: The Atlantic

If you click through to either of the links in the quotation above, you can access this graph in a nifty interactive versions that gives more detail on the various Fed programs included in the rescue effort.

This chart only covers about $8 trillion in Fed stimulus activity. I just wrote ‘only $8 trillion’ and it makes sense. What a world we live in.

The $8 trillion covered in this chart does not cover the total amount in question. There are other programs not counted such as the Treasury Asset Purchase Plan (TARP). I have seen reputable estimates for the total Fed involvement in this ‘rescue’ effort of approximately $12 trillion.

Comments

[Dave Wrixon:]

What does it matter, as worst its just bits of paper, and most of the time they don't even have to print anything.

Of course you cannot really expect people to hand over hard assets for numbers just magicked from the sky.

May 31 07:38 AM

[Gem Hudson:]

But when Hara Guru Obama has to hyper-inflate to unfreeze the credit, to hyper hyper-inflate away to pay off the Chinese and to hyper-inflate to bail out an already sunken California state. Our currency crash.

A welfare state that produce nothing for the money sell nothing for the money. They can not pay any taxes and Hara Guru Obama would have to hyper-inflate his universal health care or cut them off from the dole role to pay for his health bill. Either way his socialism just us dies.

May 31 09:58 AM

[MGA_1:]

oh... we're gonna have inflation...

May 31 10:54 AM

[jdl51:]

Much of this chart is guarantees, I believe. So if the underlying assets perform, commercial paper, mortgages are paid off, etc., these amounts will be paid off and there is no liability for the taxpayer. Your article gives the false impression that this is money that is being spent with no hope of recovery. The stimulus package is the only part that won't be paid back. The rest, including bailout money, if things work out, will be returned or the guarantees will no longer be needed. Worst case scenario, if the world economy collapses none of this will make any difference anyway. We'll all be screwed.

May 31 11:27 AM

[ChipSeal:]

jdl51 said: "Your article gives the false impression that this is money that is being spent with no hope of recovery. The stimulus package is the only part that won't be paid back. The rest, including bailout money, if things work out, will be returned or the guarantees will no longer be needed."

Any money "recovered" will be spent by congress. There is no hope that any of this will ever relieve a taxpayer of any burden.

Secondly, how is all that hope and change working out for you America?

May 31 11:32 AM

[Spartacuss:]

So, this is what "change you can beleive in" means.

Egalitarianism prescribes that we steal from the rich and distribute to the poor so tha the poor don't have to work and the rich will not want to.
Makes sense to me; everyone benefits and we can all retire early on fiat dollars that you will need a wheel barrow to haul it in. Zimbabwe, here we come.

After commiting a notional 13 trillion (that will be paid back...by whom I wonder) what is a few more trillion to fund a national health care program. If Obama can walk on water, well then, so can the budget.

May 31 01:44 PM

[conceptwizard:]

Well... Obama just sent a clear message via the treasuries Goldman man to China to eleviate concerns on dollar devaluation. "WE WONT BORROW NO MORE". I guess that means that if the recovery stalls again we have to live without Quantative Easing. That we have to live within a balanced budget. Yeah right.. If China buys that line they will be blindsided later.

May 31 07:58 PM

[simplesimon:]

Correct viewpoint above; this isn't money distributed so everyone can quit work forever, and just get a free ride. An old saw from the 50's goes, money is like manure-it's just a pile of _ _ _ _ unless it gets spread around. Roosevelt was also accused of being some kind of drunken sailor on shore leave. It all worked. Indeed...the Great Depression was characterized by no social security at all...meaning 75 year old folks had to go find a job! We're not that bad off. It will all surge back-probably too strongly, if anything. One last note...the dollar, compared to Roosevelt's time, is worth less than 5 cents today...divide 20 into 8 trillion, and it puts the drunken spending orgy in proper perspective. Oh yes...the dollar will be worth less than a penny by the next time this happens. We''l have to spend 40 trillion then. " Trillion"?... chump change. ( I'm being facetious ). Truly, though, a fundamental moral change must take place. That I do not see happening. All of us are way too materialistic, vain, self centered, elitist, and insipid. Thus we will all deserve our spiraling, flaming swan dive into bug infested Hell.

May 31 08:29 PM

[Northstar10000:]

To the dumbo Americans hope and change is "rope a dope".
You should see the office dopes where I teach brag about their trip to the inaguration. Not one of them is saying a thing now a days. Some are starting to say it looks like a Bush 3rd term. Wait till a war breaks out somewhere and watch the economy implode. Remember Hillary said we are now going to have smart deplomacy. Codi was a provost at Stanford but old hillbill is now going to start smart dep..
Obo is really very smart as far as politics goes. He buried hillbill at the State Dept where he can blame her for the war. Should be great political show when the stuff hits the fan. I'll bet hillbill pulls out of the Obo gang and runs against Obo when she finally wakes up to the fact she has been had.

May 31 08:37 PM

[jdl51:]

Chipseal wrote:
"Any money "recovered" will be spent by congress. There is no hope that any of this will ever relieve a taxpayer of any burden."

The Fed has no connection to the Congress. Congress has zero control of the Fed's finances. If the money is paid back or the guarantees are no longer needed, the Fed takes it off its books. Basic Government 101. If none of this was done, the financial system of the world would have collapsed completely, according to Paulsen and the Bush administration. And the reference to hope and change, the Fed and Ben Bernanke, a Bush appointee, is also independent of the Whitehouse and makes decisions independent of Congress and the Whitehouse. They are not supposed to be swayed by politics, but what is best for the economy. Some people apparently think Obama has his hand up Bernanke's backside and is calling the shots at the FOMC. That is not how the system works.

Jun 01 01:19 AM

[jayminho:]

oh boy
its just paper, someboy buy aracruz stock.

Jun 02 11:51 AM