Simple math question

You need to consider that the $700 billion is present value. If every US tax payer were sent a bill for $12,000 due immediately, this would be appropriate. However, this is unlikely to happen. So, one must determine the payback period, add in interest and inflation, and figure out how much of each taxpayer's contribution can be applied to this particular liability for each payment period selected. This, of course, becomes a meaningless exercise because 1) the $700 billion is no where near the final figure; and 2) normal accounting practices will make it impossible to separate this portion of the national debt from the total $15 Trillion within the short term.

What exactly is the $700 billion in the numerator? Prior respondent assumed it was national debt; national debt is really $10 trillion ($1.066X10^14).

What is the $700 billion; then we can determine if dividing it by the number of Tax filers in the numerator is appropriate.

Mathematically, the question of who ought to be in the denominator might be determined by the amount of time that they received or might yet receive their benefit from whatever your $700 billion is used for. A death bed tax filer might argue no relevance and ask to be excluded, a current working adult might be fair game, a baby doesn't file taxes but will benefit from the expenditure Or not??? Frankly, I think that tax filers is too small a class. What about corporations as tax filing entities?

But I think that your numerator is wrong, it should be $10.66 trillion.

milo " always an optimist"

700 billion is the "corporate bailout". I chose tax filers since it is taxpayer money. Children are excluded as they are not filers. I see no reason that a tax paying corp. should not receive something. As for death bed recipients they may will their share as they wish.

Keeping in mind the idea is a mathematical equation that will support my notion that a tax filing citizens receiving the $700B has a greater chance of creating an economic rebound.

I think back to Albert Einstein. Reportedly he was once asked what the greatest of mans inventions might be in his opinion. After little thought he replies "Compound interest".

It just seems to me that it is akin to trying to level a 30 story building starting with the penthouse and working your way down. Very inefficient with little control over the results.

I have checked your and the correct pay-out to each filer would be about $4 million.

Puts a little perspective on eh?

Seasons Greetings, I am CoronaCameraMan,

I have not checked your math, it is irrelevant, the only time it becomes relevant is when it is time to pay all this money back ! and by then there is compounded interest, making the amount much larger, the $700B is a number familar I think it is the same as the trade deficit last year, so that makes 2x$700B plus whatever the accumulative trade deficit is and the accumulative National Debt.

There now don't you feel better ? You didn't get any of the money but you get to pay it all back with the help of all of your descendants, who said slavery was abolished, maybe it is expanding. As an aside the US didn't collect taxes until in the early 1900's as I recall. Social Security started as a supplementary tax .... and it's not in a lockbox either, lucky it wasn't in the stock market, ...

Now divide some really large number by a population that is slowly growing at a rate one third that of China or one-fifth that of India. Start thinking of who will take your cheese, we have been eating someone else's cheese, it's time to wake up and smell the coffee, before the collections start. Starting another war has been a convenient way for our politicians to divert our attention, spend our money for defense and everybody was focused, like the magicians slight of hand. Eventually the piper has to be paid, or all the children will follow him out of town.

As a matter of matematics, if a number of taxpayers each payed $12,000 and the total came to $700 billion, then the number of taxpayers would have been about 58 miilion. We know from Wikipedia (and other sources) that the number of US taxpers is more like 138 million, so each taxpayer would contribute about $5072.

I propose ( as many other do in this case) to have US$700 B in the hands of the tax payer i.e., let me borrow my 200KUS$ mortgage at 1.5 % interest from the feds &

1- I will pay off my current mortgage(thereby a bank pay-off comes up instead of a bank bailout)

2- I will accelerate the fed mortgage , thereby paying-off early to put $$$ back in the hands of the fed who helped me; and will inject the additional money to fuel the economy ie paying for my children education, or health care, buy durable goods or fix my car or fix a roof or hire another person to help them sustain their families.

There will be as always, people who will be responsible and others irresponsible. Nontheless, this would shock start the economy right away. Instead of bailing out banks who are now holding back on OUR BAILOUT $$$$; or instead of BAILING OUT

WALL STREET ( who paid over US$400M in bonuses that came from the bailout $$$ )

Give me the $$$ and I will do my part, just as I am sure many will too! As taxpayers , we are saddled with the debt without benefits. So, we will be happy to pay for what we owe. We always have! without bailouts. Let us stop bailouts for those who acted irresponsibly. without punishment and accountability.

We'll play the game, pay, sustain ourselves and send a very direct message to whichever administration is in power: Do what you are elected to do: Represent the US CITIZEN.Legislate to represent and protect the US CITIZENS' INTERESTS. ACT

ACCORDINGLY and we will reward and respect you, by hodling democratic elections and electing to power those who craft legislation designed to protect The United States of America.

G O D B L E S S A M E R I C A

Your comments smack of taxation without representation

Perhaps I was not clear in the OP. I am suggesting that the gov. pay each taxpayer the dividend of 700B/individual taxpayer as a more viable means of "economic stimulation".

Doesn't practical math support this?

Practical Math support it. However, the basic problem resides on "the other side's action or lack thereoff" :

1st - We may get (at best) an IOU instead !

2nd- "The Other side" WILL TAX you on that income,despite original ownership of the greenback. This would be "sort of a compromise". However, the problem is the 1st item(read above)

3rd- Even if "the other side" would agree to pay the dividends to the tax payer... we would have the problem of implementation: 5 or 6 yrs from now we will still have this conversation + would add the debate on "WHEN-HOW-HOW MUCH" while we continue to loose our homes,jobs and economy at large.

4th- The "other side" will look for ways to also borrow against the dividends... so once again the T-payer is left holding the "empty promise bag" + once again the same T-payer(if still alive.. and if not his/her future generations)gets saddled with another bailout...if there is any viable economy left in the US...

I wish all of us luck..... May we all learn the way to feed / defend our families / country while the banks, WallStreet and the rest of "gimme some bailout execs" get your tax $$$ and run all the way to their vacation destinations.

My opinion is the bailout is more about separating the middle and lower upper class from their currency than stimulating the economy. The 10 trillion federal reserve note dollar deficit has grown by about 3 trillion USFRN dollars not 700 billion.

http://www.truthout.org/121408A

http://www.truthout.org/122208C

The USFRN dollars in your pocket just devalued by almost 30%. No value was added to our money system just more checks written on it.

Three trillion USFRN dollars given to the 180 million Tax paying public would be about $72,000 USFRNs each. Now That would Jump Start the Economy.

Now a altruistic government would take $2,000 from that and make the contingent that you get the balance of the money when you pass a basic financial literacy class in economics, budgeting and your legal rights. (banks and businesses couldn't violate the law if the public should know how to call them on it)

But that would be realistic way to fix the system. And that is my reasoning that this is not meant to fix the system but just a smoke screen.

Brad

Oh, come on Charley, this is not a math question, but I''ll play along. You just don't understand the "new math". You need to trust that the same people who got us into this mess will get us out of it. Have no figures fears.

I assure you I am not trying to circumvent the CR4 protocol. In fact I am hoping we will avoid the political discussion and work only in real numbers.

It honestly seems to me to be a very simple math problem that is really as easy as, say elementary algebra.

At present, even the pittance received as 'Social Security' by retirees is TAXED as income. This would be income by definition and the tax implication should be included in the equation.

Not only would there be an economic stimulation, but a tremendous tax harvest. They already have a myriad ways (taxes) in place to recoup the investment - plus if treated as a loan, the principle with interest is recovered.

The big picture.

The $700 Billion is a figure, now closer to $1 Trillion, proposed to be used to "bail out" insolvent bankers. It's "obvious" that one can't just give that money to taxpayers: 1. They would use it to buy cheap Chinese imports. 2. It would just be taxed away to pay it back to the Treasury. That is, the $700 Billion would be a debt.

Realistically, the Treasury will go to the Federal Reserve and say, "Please buy $1 Trillion in bonds from us," and the Fed will do that, "printing" the money to do so. (Actually, it's mostly done with electrons). That money will find its way to the banks. It will never be paid back to anyone; the national debt never gets smaller; it is perpetual. The Fed will now have $1 Trillion in bonds, called "assets", which it will use to "back" $1 Trillion in new money, lent to banks at close to zero per cent interest. So the banks will now have $2 Trillion in new cash, which they will keep in their vaults as assets. Through the magic of fractional reserve banking, those assets will justify the creation of about $20 Trillion in loans, checkbook debt, M-3. The injection of $20 Trillion (something like $200,000 per family) more into an economy which produces no more material goods, will, of course, cause inflation. Those who get to spend the money first will benefit most, but, eventually, it will filter down to people who sell their labor, and their income will increase, in devalued dollars. After buying $20/gallon milk, the laborer will have enough new dollars to pay off his mortgage. House prices will rise, along with car prices, clothing prices, etc. The bankers will be happy, so the politicians will be happy. Joe Six-pack will be pleased to earn more than his father ever did, even though he can't buy as much, and his house will be "worth more", even though it's the same old house and the roof needs replacing. Economists will say the additional national debt doesn't matter, as the interest payments (about 40 per cent of all income tax revenue) are no larger as a percentage of the now larger GDP, calculated in devalued dollars.

Some economists will wonder why Americans no longer save money or invest in the future, not supposing that Americans are canny enough not to put their money in savings/investments which pay less in income than they lose to inflation. Who but a fool buys a bond which pays less than 2 per cent, when inflation is running at double digits?

Since the Federal Reserve was created, on Dec. 23 by a congress anxious to get home for Christmas, the dollar has lost about 98 per cent of its value. It isn't going to get better. For the probable future of America, go read about the Weimar Republic, Argentina, and Zimbabwe.

Children ask Santa Claus for what they want, and their parents will pay for it. Parents ask government for what they want, and their children will pay for it.

The government powerful enough to give you anything you want is powerful enough to take anything you have. Government does not produce anything you can eat, drink, wear, live in, or drive. What it gives you it takes from someone else.

Let me see if I have this right:Before the banks escalated their interest rates, people could make their mortgage payments.The banks were making a living,and no one was foreclosed.The banks decided they wanted to make a killing, instead, so they raised the interest rates to appease their level of greed.Now the banks are in the real estate business, where they really don't want to be.People are losing their homes because of the high rates.The obvious solution is the lower the rates back to an affordable level.Require the banks to reduce their rates.People will be able to continue making their payments. This will solve the problem. Or is that too much common sense for upper level management and politicians to understand? Figures don't lie, but liars can figure. My $.02 worth.

Good point.

Register?

Well, so much for mathematics.

I should have known better.

Travis, (sign in so we can apply GA's to you properly) excellent run-down!

I have 2 comments and a proposition.

1 - you didn't mention that the banks were mandated to accrue a certain level of these risky loans in order to reap a certain other reward and/or avoid penalty, and

2- credit scoring is used to squeeze higher cost (interest and points) loans from those who can least afford that added expense to buy the same house. It was this 'extra' income from the higher loan rates to the poorest citizens that was the "foundation built on sand" leading to the collapse of the market.

I propose we discuss the math and the result if the $700B were distributed equally to all taxpayers.

Make it a government loan (not taxable) repayable in the higher taxes we will carry either way. Let the markets be strengthened from the buyer end.

Let the CEO's and UAW earn their huge rewards or get canned by the stockholders.

Charge equally for the cost of the house and the cost of the loan to all buyers. Like shopping at the store instead of haggling for a used car. That would truly be equality in the housing market. Making the poor man pay more for housing loans is despicable and is the root cause for the collapse IMHO.

The higher cost was to cover the additional risk of the marginal borrowers... not some mean spirited punishment.

The offer of short term loans was, from the financial institutions point of view, a way of testing the credit worthiness of the borrower. "we know that they can pay a rent payment on time, and a single car payment on time, canthey cover a larger monthly paymetn towards the ownership of the home?"

While there is plenty of blame to go around, this was not necessarily created out of meanness, just ill advised policy motives.

milo

Without sarcasm and with much substance. As I tell my kids... stop whining and start thinking about how we can survive the tax avalanche /tsunami coming right up. I tell them about how we survived the "Carter years", how we made a decision to live off one salary and forget about the "joneses next door". Much can be said... but you have done so already. I am poor financially but blessed with reaches beyond the imagination. Yet.... it continues to be an incredible challenge to keep "their hands off my pocket" so I can raise my family and help defend this Great land of the United States of America!

" Fix your eyes on the goal line. Do so without arrogance. Be humble and execute with accountability for all you do; so at the end , you and mankind will have yet another chance".

Cheers

I had criticized the idea of distributing the money among taxpayers, rather than having the government "take over" the banks, by saying the recipients would use the money to buy Chinese goods, which wouldn't help the economy. However, the trick is to return the money to the taxpayers, roughly $4000 per taxpayer, but earmarked to be invested in an IRA, a 401K or such. It the recipient chose to spend the money, the usual early-withdrawal tax would apply. The invested money would pump up the banks and stock market without putting the government directly in the banking business or having the gov't become a stock holder. Whatever the gov't does is subject to lobbying, and favoritism is the inevitable result.

What this taxpayer would do with the "bailout money":

Payoff my mortgage, pay for my health insurance,put a new roof on my house, pay for my kids college education, replace my 203,000 mile '97 car with a used car and

invest in my business so I can hire other taxpayers. And yes.. I WOULD NOT BUY

FOREIGN MADE GOODS FOR A LONG TIME( HARD TO DO BUT NOT IMPOSSIBLE).

Talk about hardwiring the economy. Everyone benefits: Gov, banks, business, you and I.

This is my point exactly.

Put the money in the handsd of the REAL investors....the taxpayers.

Many agree with you! Comments below.

Let us continue drive accountability into their heads and let is put the pressure into those who were elected to navigate these difficult waters.

Let us remind them, that is time to EARN THEIR KEEP or else joint the unemployment lines just like everybody else.

I'll do my part if given the chance to level the playing field and play by reasonable rules. They do not have to be fair...just level the play field. I'll do my part & I am sure many will do as well.

One must realize that a bailout is only figures on paper, not hard cash. Where is the government going to get that much cash to distribute to the public? Print more worthless paper?

Their plan is to print bonds and sell'm to anyone with cash , including foreign govs.

Here is further moves by the Federal Reserve Bank that show they are not a government agency but have an agenda of their own.

http://www.truthout.org/010209L

Here is the source article.

http://online.wsj.com/article/SB123068292824744097.html?mod=rss_Politics_And_Policy

Brad