Question: With all this economic turmoil and talk of trillions of dollars, my question is: What is the total wealth of the United States?
If the total U.S. wealth is, say, $100,000 trillion, then spending $1 trillion to help banks is perhaps not too much to spend.
Paul Solman: There’s no good answer because wealth is in the eye of the collective beholders, and we’re changing our minds as quickly as you read this. What was the U.S. stock market worth just a year ago? Many, many trillions more than it’s worth today. Same for the housing stock of America. Same for our art collections, our baseball card collections, and the strategic petroleum reserve. When asset values are declining as rapidly as they are today, who would dare say what the country is worth?
But the wisdom of the government spending a trillion dollars, or a gazillion, for that matter, hinges not on its size as a fraction of the economy, but the likelihood that it will revive activity, or at least slow the decline. To the extent it does that, it will RAISE asset values and therefore pay for itself.