A suggestion for President Obama’s next banking bailout

A suggestion for President Obama’s next banking bailout

So I’d been watching money as debt trying to figure out how much of it was accurate or relevant and then the credit crunch happened.

I got me thinking, if you get a run on the bank in a fractional reserve system where financial institutions are able to lend more money than they hold in assets that can be pretty bad for the banks. If you have the same run on the bank where the fraction of the bank’s debt that is backed by assets has become so tiny as to be for all intents and purposes nil that’s an even worse thing.

Or, in other words, it’s beginning to look like the gap in the banks finances is theoretically infinite. When the sum of money required by the banks to patch the system climbs above a certain limit it ought to make sense to not give the money directly to the banks (seeing as it’s our money to begin with).

So here’s my suggestion. Instead of pouring a trillion zillion squillion dollars (ie our future) into the unaccountable bottomless pit of bank finances, why not simply give every citizen 100,000 dollars? Those with mortgages can repay them (the banks getting the liquidity) and those who rent can spend it on sending their kids to college or buying a year’s supply of something they need.

That seems like a much better solution to me. The estimated US population in 2008 is just under 400 million souls. So what’s 400,000,000 × 100,000 = 40,000,000,000,000 ? Is that 40 trillion?

How far off am I to make this work? Apparently, the world’s total GDP in 2007 was 57,000,000,000,000 (57 trillion) so it may be a little hard to score that kind of cash on short notice…