$14T Spent on Debt-Ridden Global Economy--So Far
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By Stella Dawson,
April 23, 2012

The amount of money thrown at rescuing the world economy since the Great Recession began is truly staggering, probably more than $14 trillion, and the financial spigots are still open.

Industrialized and emerging nations pledged another $430 billion to boost the International Monetary Fund's lending power this weekend, doubling the size of its crisis-fighting war chest in case Europe's problems worsen and engulf more countries. Three weeks earlier, European Union leaders set aside $1 trillion for Europe's bailout fund creating a firewall to prevent the euro zone's sovereign debt woes from spreading.

Major central banks haven't finished pumping money into the global economy either. The Federal Reserve meets on Tuesday and Wednesday and the Bank of Japan meets on Friday, and their bias toward monetary easing through bond purchases is likely to remain firmly in place. Japan may even ease again to counter deflationary pressures.

The IMF has recommended more action from the European Central Bank, and the People's Bank of China is seen cutting its bank reserve requirements this year to underpin growth. But can all this money restore growth to robust levels anytime soon?

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Government officials and economists point to the same problem: too much debt. Rescue funds and central bank stimulus measures are just keeping the world economy afloat until the hard and painful work of repairing balance sheets gets done. "The real solution has to do with the fiscal and structural reforms that address the real causes of this crisis, particularly in Europe, but also elsewhere," said Tharman Shanmugaratnam, Singapore's finance minister and head of the IMF's steering committee. "The firewall is absolutely essential, but by itself it is not sufficient, and the real solutions require attention."

In 2009, the IMF calculated that official rescue efforts totaled nearly $12 trillion, and since then the Fed and the ECB have pumped more cash into the economies they oversee. All of this money - equivalent to the annual output of the U.S. economy or roughly $2,000 for every man, woman and child on the planet - cushioned the economic blow worldwide from collapsing house prices in the United States and parts of Europe, bank failures and the steep contraction in business and household spending.