The financial crisis bailout tab stands at a whopping $11.6 trillion for Uncle Sam, but the total is shrinking thanks to the Federal Reserve’s curtailment of its massive monetary stimulus.
The Fed is allowing some of the 10 support programs it created or expanded after the credit crisis began in August 2007 to expire or shrink.
That move has sparked the first decrease in the amount committed by U.S. taxpayers to pull the economy out of its meltdown, according to data compiled by Bloomberg.
“The first thing the Fed had to do was stop the bleeding in the banking system,” Richard Yamarone, director of economic research at Argus Research, told Bloomberg.
“Now that that seems to have been accomplished, they’re focusing on the economy by buying mortgage-backed securities.”
The purchases were originally supposed to stop at year-end. The Federal Open Market Committee decided this week to sustain the program through March 31 and slow the pace of buying to “promote a smooth transition in markets.”
The U.S. has lent, spent or guaranteed $11.6 trillion to prop up the financial system and jumpstart the moribund economy, according to data compiled by Bloomberg.
That’s a 9.4 percent decline from March 31, when Bloomberg last calculated the total at $12.8 trillion.
But many experts say we’re still not out of the woods.
Boston University economics professor Laurence Kotlikoff wrote in the Federal Reserve Bank of St. Louis Review that the government “is going broke.”
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