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$3.9 Trillion Was a Drop in the Bucket

By Christopher Barker - Updated Apr 5, 2017 at 8:09PM

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Keeping a tally of total outlays puts the scale of the crisis in context.

I remember when $3.9 trillion sounded like a lot of money.

Just weeks after that unfathomable figure dropped my jaw to the ground as I added up the total cost of the financial crisis, I regret to inform you that the sum has promptly doubled. That's right: While the nation was mired in contentious debate over a measly $25 billion bailout for the likes of General Motors (NYSE:GM) and Ford (NYSE:F), my Foolish running tally grew by more than 188 times that amount!

Drawn from independent research and diverse published sources, the following table seeks to provide as precise an accounting of the crisis as the public record currently permits. By my calculations, the combined total of existing and announced outlays from the Federal Reserve and from U.S. government agencies that are directly attributable to the financial crisis has ballooned to more than $8 trillion.

Item

Issuer

Amount of Outlay

Commercial Paper Funding Facility

Federal Reserve

$1.8 trillion

Temporary Liquidity Guarantee Program

FDIC

$1.4 trillion

Term Auction Facility (TAF)

Federal Reserve

$900 billion

Fannie Mae (NYSE:FNM), Freddie Mac (NYSE:FRE), and Ginnie Mae

U.S. Treasury / Federal Reserve

$800 billion

Treasury Asset Relief Program (TARP)

U.S. Treasury

$700 billion

Total USD International Currency Swap Lines

Federal Reserve

$688 billion

Money Market Investor Funding Facility

Federal Reserve

$540 billion

Other Loans: Primary Dealer Credit, etc.

Federal Reserve

$288.7 billion

Citigroup (NYSE:C) Guarantee

U.S. Treasury / FDIC

$306 billion

Hope for Homeowners Act of 2008

U.S. Treasury

$304 billion

Term Securities Lending Facility (TSLF)

Federal Reserve

$225 billion

Term Asset-Backed Securities

Loan Facility (TALF)

U.S. Treasury

$200 billion

Economic Stimulus Act of 2008

U.S. Treasury

$168 billion

Paid to JPMorgan Chase (NYSE:JPM)

to Settle Lehman Brothers Debt

Federal Reserve

$138 billion

AIG (NYSE:AIG) Bailout

Federal Reserve

$112.5 billion

Bear Stearns Brokered Sale

Federal Reserve

$26.9 billion

I'm afraid to look …

Total:

$8,597,100,000,000

* "Other loans" total from the Fed's statistical release as of Nov. 19, 2008, which includes discount window lending to banks and brokerages, and the Asset-Backed Commercial Paper Money Market Liquidity Facility.

Before we use some known quantities to place that sum in perspective, please note the following:

  • In some cases, relatively small portions of the pledged amounts have thus far turned into actual loans.
  • Virtually all of these outlays are considered temporary in nature, although in many cases we have no way of knowing just how temporary they will be.
  • Some of the amounts indicated above could grow larger still. The ultimate value of all U.S. dollar international currency swaps, for example, cannot be known precisely, since the Federal Reserve established some unlimited swap lines last month.

The ultimate numbers game
This enormous debt is no joke, but that doesn't mean we Fools can't have fun crunching the numbers down into bite-sized pieces. With the holidays approaching, consider that $8.6 trillion is enough to teach the world to sing in perfect harmony, buy the world a Coke, and still have more than enough left over to buy every single person in the world a 50-inch plasma TV.

For Fools wishing to know what they're on the hook for, the $28,119 share for every soul in the U.S. would keep all Americans super-sized with a McDonald's double cheeseburger every day for 77 years. Alternatively, the ghastly sum could have subsidized the winter heating expenses for all American households for 79 years at 2007 prices.

The Yucca Mountain of debt
At some point, we must concede that the scale of these outlays calls into question the collective ability of the borrowers to repay these loans. How long will it take for a struggling economy to repay $8.6 trillion? Clearly, we just don't know. We do know that both the Federal Reserve and the Treasury are amassing debt securities as collateral that no private entity will touch right now, and we know that the Fed is refusing to disclose related details despite a pending lawsuit from Bloomberg.

The continuing indications from Washington that dollars will be hurled at this crisis in any quantity deemed necessary raises legitimate concerns about the future purchasing power of the dollars in your wallet, your CD, Treasury bonds, or other dollar-denominated instruments. Occurring in a vacuum, a deleveraging event like this one would be decidedly deflationary. In the context of these outlays, however, I believe "stagflation" and "hyperinflation" will instead be among the words historians use to describe this period.

Thankfully, one need not convert out of the currency to find some protection from a falling dollar. The Motley Fool Global Gains newsletter team is constantly scouring the globe to identify terrific investment opportunities for Fools who wish to diversify out of the domestic markets, and they're ready to share their findings with you.

Further Foolishness:

Representing a basket of commodity-related picks, Christopher's CAPS score has plummeted from the top 1 percentile to the complete opposite end of the spectrum since the spectacular summer sell-off in commodities. He thinks his pain could be your gain, and he invites you to explore his picks, create your own CAPS profile, and see how your picks compare to the 120,000-member CAPS community.

Fool contributor Christopher Barker thinks his great-grandchildren may still be paying this debt. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. JPMorgan Chase is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
F
$16.15 (0.75%) $0.12
Citigroup Inc. Stock Quote
Citigroup Inc.
C
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JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$121.64 (-0.78%) $0.95
American International Group, Inc. Stock Quote
American International Group, Inc.
AIG
$57.33 (1.13%) $0.64
General Motors Company Stock Quote
General Motors Company
GM
$38.72 (0.83%) $0.32
Federal Home Loan Mortgage Corporation Stock Quote
Federal Home Loan Mortgage Corporation
FMCC
$0.60 (-0.83%) $0.01
Federal National Mortgage Association Stock Quote
Federal National Mortgage Association
FNMA
$0.62 (-0.64%) $0.00

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