The U.S. Treasury yesterday announced plans to expand its Troubled Asset Relief Program (TARP) by as much as $1 trillion:
The plan calls for the federal government to work with private investors to try to restart the market for the troubled mortgage loans and securities, which in turn officials hope improves the financial condition of banks that have received billions in capital injections from the government already. The federal government will pair as much as $100 billion with private capital to generate $500 billion in purchasing power to buy the assets, and Mr. Geithner told reporters the plan could reach $1 trillion in size over time.
Of course, the U.S. Treasury Department isn’t giving a hundred billion dollars in cash for free. The government-provided funds available to investors looking to purchase “troubled” assets, as identified by the banks currently stuck with them. The highest bidder for such assets will receive “50% of the equity requirement of their purchase” from the Treasury. If the plan works and these assets increase in value, the Treasury actually makes money on their investment.
Whether it is too much or too little to help the credit markets rebound will surely be the subject of much debate-the contentions are far too controversial and technical to go into here-but what is certain is that $1 trillion is a lot of money.
To put it into perspective, if you had $1,000,000,000,000 in cash, you could buy:
- 282 billion Big Macs
- 3.1 million Ferrari 599 GTBs
- 769 New Yankees Stadiums
- 28,571 flights into space as a tourist
- 66.7 billion copies of Oliver Stone’s Wall Street
And in case you’re a visual learner, PageTutor.com has this illustration of a man standing next to $1 trillion worth of $100 bills:
UPDATE: Econ4U has released a survey and video on how many Americans can correctly identify how much $1 trillion is. We also have a page with more statistics and visualizations here.
