This question was posed recently, after the government announced plans for another bailout. This one to the tune of $825 billion. If Congress ends up passing this bailout provision they will have the task of dividing up the funds across the country in various amounts to failing corporations, banks, states and municipalities. I suspect very little, if any, will actually reach the average working stiff. But it is fun to think about what we might spend it on were we blessed, or cursed depending upon your perspective, with having a massive bank account with those kinds of funds available.

Some of the people commenting on this have suggested they would spend massive amounts on ousting Mugabi and restoring economic stability to Zimbabwe. This could very well work, except for one serious flaw. Consider that whenever an economy is flush with cash, the standard of living is immediately thrust upward. People who are living at or near poverty suddenly becoming wealthy would lead to untold problems. Being immediately flush with cash, and never having the necessity to learn about money management, the buying spree would create an expectation of deservedness. Businesses wouldn’t be able to keep up with demand, jobs would be outsourced to areas of lower economic expense and attitudes toward money would change dramatically. This doesn’t mean it would be bad for everyone. Many people will take their bounty, invest wisely and refrain from spending like a drunken sailor, and hopefully when the masses have spent their wads of cash, the savers and investors will still have a nice nest egg to manage when the chips finally fall. Of course this could never happen … could it?

Through various government actions and inactions, coupled with lax corporate policies, the US has put itself in this exact position. While we didn’t have a mysterious benefactor step in and restore economic stability, we did have a period of extraordinary growth in spending just prior to 2004. Economic indicators suggest that people were beginning to spend significantly more than they earned. This unearned income came in the form of credit cards, home equity lines of credit, mortgage loans and all other sorts of credit instruments. In their desire to bolster profits, corporate America turned a blind eye to inevitable doom and gave out loans to anyone who was breathing and some who weren’t. Of course Washington also turned a blind eye to the problem because it would be unpopular with the people. We want things, things we cannot afford but are subliminally entranced into believing we deserve, by an unprecedented advertising campaign. I suspect there are very few people in this country who did not get at least one unsolicited “Get your easy mortgage here!” phone call while trying to enjoy dinner.

So, lenders gave out cash, and consumers consumed. When the well went dry, they went back and dug themselves in just a little deeper. Each time getting pushing America, and the world, close to the precipice. When lenders finally said “there is no more cash in the pot”, people begin to panic. Panic is never a good thing for an economy. When people panic, they do things that they wouldn’t normally do if they were thinking rationally. The biggest thing people do is horde cash … they question “what if”. Well, the problem is that the sudden cease of spending causes widespread rapid deflation, i.e. recession, and if left unchecked depression and high unemployment. Then people find it difficult to revert to an earlier lifestyle, particularly in today’s economy where nearly every service comes with a 2 year contract attached. 

Many years ago, a good friend of mine told a story of a military pilot in 1954 flying into a South American country. While on leave, the pilot was approached by a young boy selling large bags of roasted peanuts for a nickel. The young boy was about 8 and he was pulling a large wagon with sideboards laden with as many bags of peanuts as he could pull. Considering he really liked roasted peanuts and the price was right, the pilot told the young boy to deliver them all to his hotel. When the boy delivered them the total price was less than $2, but the pilot figured they were much more expensive in the US and were worth at least $20. Feeling a bit magnanimous, the pilot reached into his pocket and gave the young boy a crisp $10 bill for his trouble. The problem here was that $10 wasn’t a huge amount for the pilot, but $10 was the equivalent to about 3 months of wages for the average person. Suddenly, this young man was wealthy beyond belief and the economic stability of the entire area was sent into a downward spiral, all because a small boy had been given a $10 bill. It was reported there were riots in the boy’s neighborhood and several people were injured. Upon returning to the US, the pilot was immediately reprimanded and demoted a rank for his part in the incident.

Of course we aren’t talking about peanuts, but we are talking about upsetting the economic stability by giving people more than they can deal with responsibly. This is exactly what happened in our economy. People were spending other peoples money uncontrollably, then they failed to return it as promised. Almost single handedly, the greed of people was the undoing of the economy. Boom times may be nice, but behind every boom is a bust, some larger than others.

Think about what you would do with $825 billion. Would you help a starving world and in the process make them dependant upon your cash? Would you simply help a few people with a cash influx to allow them a bit more time to get their finances in order, only to give them unfounded security? What about supporting your local civic organization and charities? Funding cancer research would be nice … All of these are noble causes, but unless they are handled properly, the net result will be failure.

I know what I would do with $825 billion. The first thing I would do is eliminate my debt, then without worry of a job, I would make myself available to provide unexpected joy to others, in a small yet meaningful way. You see, I don’t want to make a name for myself giving away tens of millions of dollars to people. Eventually it would run out and in the end, people wouldn’t remember me or the reason I helped them. Instead, I would be the guy standing in the grocery store, providing an unexpected windfall, just enough to pay a struggling family’s bill. Perhaps I would send the lawn care folks over to cut the grass of a disabled person. It isn’t the big things that people do, but the small things that bring joy to others. That is what I would do.

What would you do?