Government Intervention Costs to Exceed $7.5 Trillion?

And so, apparently, the bailout costs most commonly discussed and mentioned in another post as approaching $2 trillion once Obama takes office, are really just obfuscations of the real costs of this round of government intervention. In fact, they’re only some of the tactics in play or planned:

The government’s financial bailout will be the most expensive single expenditure in American history, potentially costing around $7.5 trillion — or half the value of all the goods and services produced in the United States last year.

In comparison, the total U.S. cost of World War II adjusted for inflation was $3.6 trillion. The bailout will cost more than the total combined costs in today’s dollars of the Marshall Plan, the Louisiana Purchase, the Korean War, the Vietnam War and the entire historical budget of NASA, including the moon landing, according to data compiled by Bianco Research.

It remains to be seen whether the government’s multipronged approach to bail out banks, stimulate spending and buy up mortgages will revive the economy, but as the tab continues to grow so does concern over where the government will find the money. [Emphasis added.]

Well, golly, I wonder? Of course, the answer’s clear: the money will be “found” by borrowing it and printing it. Either way, the long term impact will be devastating.

Some other tactics not commonly discussed in the press:

Bailout programs also include a Federal Reserve plan to buy as much as $2.4 trillion in short-term notes called commercial paper that began Oct. 27, and an FDIC plan to spend $1.4 trillion to guarantee bank-to-bank loans that commenced Oct. 14, according to Bloomberg News, which first compiled the total cost of the bailout.

We don’t often hear about this money, do we? A little scary, eh? And if you think that’s bad, consider this:

“No one really knows if any of this is going to work,” said Barry Rithotlz, CEO of Fusion IQ, an online quantitative research firm and author of “Bailout Nation.”

“All of these different things are going to have a limited impact, and it remains to be seen which if any of them will resolve anything. Paulson today pledged $600 billion to buy debt backed by government chartered Freddie Mac and Fannie Mae. That will put more money into the system, but so far we haven’t see a tremendous response to mortgage rates.”

This is theft on an imaginable scale, a scale that could only be perpetrated by the wholesale (albeit, largely hidden) use of profound government force. It’s done every year, of course, with trillions being spent on things that are no part of government’s legitimate authorities and responsibilities. But, it’s never been done so blatantly, all at once.

And when one considers that these actions are so much more vast than anything FDR did to cause the Great Depression, one can only imagine (or not) just what the impact will be. I’m almost speechless.

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