Back of the envelope math....

Let’s see!  The U.S. has so far borrowed/committed:

$141 Billion for last summer’s stimulus

$830  Billion for TARP I

$789 Billion for the Porkulus

I’ll use a base line figure of $600 Billion for TARP II — (it will probably be more, but I’ll be Conservative…) and we’ve committed about $3.5 Trillion to backing Fannie and Freddie

This adds up to roughly $5.86 Trillion.

Now divide $5.86 Trillion by 310 Million which is the current estimate number of every Man, Woman, Child and Illegal Alien on our soil and you come up with a quotient of approximately $19,000.00

If I got 4 checks for $19,000.00 (1 for every person in my house) that would equal $76,000.

Most people with families that suddenly came into an extra $76K would do at least some of -exactly- what I would do:

A) Pay off revolving debt and mortgage principal.  B) Spend some of the extra cash that is not going to monthly debt service and save some of the rest . C) Look to upgrade my house or buy a bigger one.

Of course milage may vary depending on where people are in their lives and family situation….

The overall end effects of this would be

A) Re-capitalization of the banks through loan repayment/principal reduction/savings  B) Job creation through a long term stimulation of spending — of CASH.  C) A bottom for the tank home prices are in.

It also bears mention that such an infusion would “un-freeze” the credit markets.

The sudden burst of money supply would demand a roll back of the interest rate cuts to strengthen the dollar and prevent hyperinflation.   The interest rate is the lender’s compensation for the risk of making and servicing a loan.  Right now they’re too low to adequately compensate for the risk associated with ANY loan, particularly the really, really big dollar ones to corporations — which virtually none of them now have the wherewithal to obtain since they are all bleeding earnings.

A steady increase in rates as people begin making use of all this money would also give back to the Fed an important monetary tool (the rate throttle) and finally give lenders incentive to lend again.

….Depression averted!

Now, now!!!  Did we really need to take 10 years off the life of poor old Turbo Tax Tim?

See how easy it can be to solve really difficult problems when you are actually working for solutions instead of pet projects