The trillion dollar question

QE-1, QE-2 etc were intended to jump start the US economy. The total amount was approx __ trillion. I got to thinking, what could be accomplished with a trillion dollars, toward jump starting an economy? How much is a trillion dollars? How was the money spent? Did it work? Where did the money really go? Following is a scenario that deals with the first two questions and puts emphasis on the last two.
In July 2013, approx 144-million people were employed and approx 11-million were unemployed.
Let’s consider a scenario to get an idea of the big numbers involved here. Say a corporation is formed called “Jump Start Inc” (JSI) and is given a trillion dollars to spend to jump start the economy. That is, it has a budget of 1-trillion dollars to spend in one year.
Say JSI hires 10-million people and pays them $10.00 an hour, for a 40 hour work week, 50 weeks a year, (to keep the math simple.) Each person has a gross income of $20,000 a year. That is a 200-billion dollar, annual payroll, which is only 20% of the JSI budget. National unemployment would come down to less than 1%, legitimate unemployment and welfare costs would be greatly reduced at the state and national level. JSI could claim success, but these employees aren’t doing anything yet except milling around. So management at JSI has a meeting and decides to furnish each person with a wheelbarrow. Wheelbarrows cost between $100 and $250 if you buy them one at a time. Let’s say they decide to buy the made in USA model and that they get a quantity discount and only pay $200 a piece. Yes that’s a 2-billion dollar order for wheelbarrows. JSI could set up and build the biggest wheelbarrow manufacturing plant in the world, but they decide to buy from an existing company in the US, “Wheelbarrows USA Inc.” WUI places orders for components. Akron Ohio, 10-million wheelbarrow tires. Youngstown Ohio, 10-million tubs. Pittsburgh, 10,000,000 wheels and axles. Somewhere in Oregon, 20-million wooden handles. Somewhere in New Jersey, 300,000 gallons of primer and 300,000 gallons of JSI blue paint. USA made wheelbarrows weigh 50# each, so there is 500-million pounds of freight from the various component suppliers to the WUI assembly plant in Kansas. And another 500-million pounds of freight from Kansas to the place where the wheelbarrows will be used. That’s 1-billion pounds of freight. Say they ship by truck at 40,000# per truck. That’s 25,000 truck loads, traveling at an average distance of say, 1000 miles would be 25,000,000 miles or a distance of 52 times to the moon and back. (Yeah, I know the distance to the moon thing is getting old, but it does make a point.) Well thanks to JSI the steel industry got an order for 350-million pounds of steel. The wood, paint and freight companies also got huge orders.
JSI has another meeting. “Well, certainly we have accomplished a lot so far, but let’s keep going. If JSI sets up 1,000 work stations across the country, there would be 10,000 workers at each work station. One genius at JSI says, “Let’s have half of the workers, at each work station, move dirt from one pile marked “A” to another pile marked “B” and then have the other half of the workers move the dirt from pile “B” back to pile “A”. That way everybody is working, and we have helped the economy. The comptroller stands and says, “that’s a dumb idea and by the way, we have only spent 22% of our budget, so we can’t quit now. Someone from human resources stands up and says, “Let’s give all the employees a 50% raise.” The pros and cons are discussed, “That’s a heck of a raise for people who have not actually done anything” and “$10.00 an hour was too low to start with, regardless of what they’re doing.” Finally the idea was floated that there could be two bonuses. One at 6 months for $5,000 and another at the end of the year for another $5,000. They agree on this last idea and look to the comptroller. He says, “Sorry that brings it up to 32% of budget.” The VP of good ideas says “There aren’t any more people to hire and we’ve got wheelbarrows out the ‘whazoo’, now what. Engineering says “We need to do work that requires additional material that we have to buy and furnish, like rock, sand and cement.” “We have 10-million people and all those wheelbarrows.” By the way whose idea was it to buy 10-million wheelbarrows? Duh!” Someone else reminds the group that the company’s original requirement was not necessarily efficiency, but rather to cause new money to circulate, so as to improve the economy. Engineering can’t grasp the concept but sits down.
Ok engineering, say we want to build a dam, the size of Hoover dam, which has 3,250,000 cubic yards of concrete. Well, each wheelbarrow load is 6 cubic feet or .22 yards. So that would be 14,772,727 wheelbarrow loads. That means each employee would only have to move 1.5 wheelbarrow loads a year. “Ok, purchasing, How much does concrete cost?” “Say $100 a yard or $325-million for the whole dam. They all look to the comptroller who just smiles and says, “You would put a lot of people to work outside of JSI, to furnish rock sand and cement but it would only cost .0003% of budget.
Now for a reality check. Bare with me. I realize building a dam is a lot more complicated than men with wheelbarrows, but am trying to show the magnitude of a trillion dollars. The Hoover dam was built in 1931 for 50-million dollars which would be 690-million dollars in 2008 dollars. So how many Hoover dams could you build at 690-million dollars apiece, with a 1-trillion dollar budget. My calculator keeps coming up with1449 dams. What this means is, each of the 50 states could have received enough money to build or rebuild infrastructure that would have a cost equal to 29 Hoover dams at today’s prices. That would be, 1-trillion dollars. However it could have been way greater than that as there were many trillion dollars supposedly spent for jump starting the economy, not just 1-trillion dollars.
Now, for the last three questions. How was the money spent? Did it work? Where did the money really go? I don’t have answers for these questions, but it really pisses me off to realize what could have been done. But who cares? Who is willing to do anything about it? Evidently we are satisfied to just wait and see what’s going to happen, and do nothing about it. Hmmm!

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