QE2…How Much Does It Cost To Employ One Worker? $600,000

Ben Bernanke is ticked off.  The world is questioning his judgment, and that of the entire Federal Reserve Board.  When $1.7 trillion didn’t work in terms of creating jobs, they threw more money on the fire, literally burning up value.  When called on the carpet to explain why an additional $600 billion would help where $1.7 trillion didn’t, Ben sent his minions (Dudley, Yellen, Evans, etc.) to defend the program, and even went before Senators himself.  His defense is simple … he thinks that $600 billion might..MIGHT…create between 700k and 1mm jobs over the next two years.  Ahem.  Let’s do some basic arithmetic.

If Ben spends $600 billion to create 1mm jobs (let’s be generous, giving him the top of the estimated range), then that equates to $600,000 per job, thereby putting such workers into the top 1% of all wage earners in America.  I think we can come up with a better plan.  Instead of hoping that excess liquidity at banks will result in greater loans so that inflation is sparked in order to induce potential spending by consumers and businesses (yes, that is the theory), just directly employ people.  If we are bent on spending the money, then simply create a 3-year job program that pays $50k to $75k per worker, and hire 1mm people.  The program will cost roughly $200 billion in income plus expenses of, say, an additional 30%, so $60 billion, for a total of $260 billion.  This would save taxpayers $340 billion of printed dollars, thereby reversing the devaluation of the US dollar, and allow interest rates to rise to a natural level, thereby rewarding savers.

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