Saturday, October 1, 2011

How to fix the Economy - No it is not that simple

A friend of mine posted this on Facebook from a letter to a newspaper on how to fix the economy: "There are about 40 million people over age 50 in the work force. Pay them $1 million apiece severance with these stipulations: They leave their jobs, which means 40 million job openings. Unemployment fixed. They buy new American cars; 40 million cars ordered. Auto industry fixed. They either buy a house or pay off their mortgage. Housing crisis fixed. Some people make things so complicated when they don't have to be. This is a lot less than the billions given to banks and insurance companies." You can find the article here.

There are a lot of problems with this suggestion, but let's take the most obvious. This US government program would cost $40 trillion. In case you missed it, that is a 4 followed by 13 zeros. That would be more than two times the current US government debt, or 2226 times our current domestic income. In other words, assuming zero interest and assuming a simple loan all final domestic income is used to pay for this program, the US would pay it back in the year 4237.

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