There was a time when $700 billion was real money. But it's just 10% of the current size of the bailout.
http://money.cnn.com/2008/11/26/news/economy/where_bailout_stands/index.htm
And, if you think $7 trillion is a staggering number, we're nowhere
near done. Bank of America is standing at the door with its tin cup
out. So are the Big Three. And the airline industry. And cities and
states across the country. And the DOT. And the list goes on and on.
We just bailed out Citigroup to the tune of about $350 BILLION bucks. Why stop at $25 billion for the automakers? As much as we're throwing at the big banks, why not give them a few hundred billion? After all, they represent real jobs for millions of real middle-class people, not a few thousand rich bankers.
The problem comes when you ask "Where is all that money coming from?".
It's simple. They're making it the REALLY old-fashioned way: THEY'RE PRINTING IT. That, and selling U.S. Governement Treasury Bonds by the hundreds of billions. Problem solved. :) What's the worst that could happen?
Try national bankruptcy, or an inflationary death spiral until our money isn't worth the paper it's printed on.
After all, when you subtract Social Security from the Federal budget, the Federal government only receives a little over $1.6 trillion dollars per year in taxes. And the Department of Defense spends about $600 billion of that, then the two wars cost $180 billion or so per year, the VA takes another $97 billion, Homeland Security costs $58.2 billion, the various intelligence services cost at least $15 billion (actual amount is classified), military pensions are yet another "discretionary" expense that the DOD doesn't keep on its books, then there are close to a hundred other small military-related programs that have been unceremoniously dumped into "Discretionary spending" instead of the DOD budget. That just leaves about $500 billion to pay for all the rest of our "discretionary" expenses, everything from roads to schools, from the justice system to the Center for Disease Control, everything from health care to government employees' pensions. All of that stuff costs over a trillion, the same as our military. How do they manage it? By taking the Social Security surplus and dumping hundreds of billions in U.S. treasury bills into it. But the SS tax surplus is going to disappear soon as the Baby Boom retires, at the same time that the first of those 3-year notes that the Fed is issuing starts to mature.
Hmm...since there is no possible way for the government to actually pay
for any of that $7 trillion and counting in new debt, how does it plan
to keep from drowning in this sea of debt? I would rather believe that
the moon is made of cheese than to trust Paulson to be telling the
truth when he says that the government is going to remove all that new
money from the money supply "once the economy recovers". Try never.
There is just no way to keep that much newly printed money from causing
an inflationary spiral. We're in for some rough sailing ahead; we may
see prices go through the roof in a couple of years, if we're not
careful.
If you're thinking that sounds impossible, remember that in 1919, one dollar would buy 12 German marks. By 1923, it would buy 14 BILLION marks. The Germans were burning wheelbarrow loads of money just to keep warm during the winter. That was one of the big problems that led to the rise of Hitler. And that isn't the only time; the Romans, Chinese, French, etc. have learned the same lesson over and over again, hundreds of times throughout history. They all think that this time it will work; all the others just weren't as smart as they are. Guess what? They were EXACTLY as smart as all of the other governments who thought they could print their way out of a real economic jam. And each had the same ultimate result: Runaway inflation.