How Much Will the US Bailout Cost?

Dear Friends,

We keep hearing / reading about concerns regarding the Excessive Government Spending to Bailout and stimulate an American Economy in serious trouble. This Excessive Government Spending translates to an Excessive Printing of Money by the US Government, since it doesn't have any money in its coffers in the first place. The US Government knows that US taxpayers will have to pay up for what the Government spends today, some time in the future, but there is no proposed solution as to how the Debt will be paid.

Exactly how much is this "Excessive" Government Spending on Bailouts and Economic Stimulus?

John W. Schoen, Senior Producer of MSNBC.Com, estimates that as at today, 13th April 2009, the total announced effort has come up to US$7 trillion, although he expects the actual tab to the taxpayers to be far lower. You can read his interesting article entitled "What's the Tab for the Bailout? Take your pick. " by clicking on the title.

The Population of the US is about 300 million people, and if the US Government splashes US$7 trillion in 2 or even 3 years on bailout and economic stimulus, this will translate to an additional tax debt of US$23,333 per person, including the one day old baby just born yesterday.

Can you imagine being indebted to the US Government by US$23,000 right from the first day you are born? This is on top of the US$14 trillion Government Debt already in existence, and thus, the total debt of this new born baby will be US$70,000. This is despite the fact that the poor fellow hasn't even learn to say, "Mama".

If we exclude the young and the aged, and only expect the working population to pay for the Government Debt, including that proposed to be spent, then we are looking at US$123,000 per worker, before interest charges.

This is on top of his housing mortgage, credit card debt, personal loans, car loan, student loan, etc. No wonder babies come out crying. They are so highly indebted even I would cry.

The problem is not how much the taxpayers will have to pay up on Government Debt. The problem is that US Government keeps spending more than what it can collect from the American taxpayer, and thus, even if it collects more tomorrow, the tendency is to spend everything it collects and even borrow some more to spend. Good economic times, bad economic times, you name it, the Government always spends more, and has NEVER brought its debt level down.

Now, if you are a banker, do you think such a person is creditworthy? If you are that person, do you think any banker will find you creditworthy?

This is the crux of the concern that we are having, i.e. one of Excessive Printing of Money just because it is paper not backed by anything. Many decades ago, a country had to have Gold Reserves before it prints paper money. The US Government stopped this during the time of President Nixon, and now, it just prints and prints.

If there were absolutely no repercussion to this printing of money, why don't every country just do it and pay its people more?

I leave you with these questions for your further contemplation.

Best wishes,

Ooi