Everyone is trying to figure out how much money the Federal Reserve and the US Treasury have committed to bailing out the financial industry and the US economy, something that appears to be a state secret on a par with the number of civilians killed in the Iraq War. "We don't keep track" was absurd when the Pentagon said it; it's criminal for the Fed and Treasury to say it now. Independent estimates range between $3 trillion and $7 trillion.

An argument can be made that the tremendous cost of the Iraq War has inured us to the huge numbers involved in the government's economic rescue; I would argue that the reverse is true: the trillions of dollars being poured down the black hole of the banking collapse will eventually make the Iraq War seem cheap by comparison.

So it's worth asking: what are we getting for our trillions in taxpayer money? The Treasury has spent almost all of the first half of the $700 billion bailout package, and none of it has gone to purchase "troubled assets" from banks. Instead, the Treasury poured that money directly into the coffers of a dozen or so big banks with no strings attached; the Treasury told them to loan it out to people, but the banks have hoarded the cash to offset losses from bad loans or used it to buy their weaker rivals. Whether we, the people, supported the $700 billion bailout bill or not, the money at least ought to be spent according to the outlines of the bill passed by Congress.

Now comes more bailouts. An extra $20 billion poured into Citigroup, when its market value fell so low that the company was worth only $20.5 billion on the Friday before the Treasury announced this new cash infusion. Did the Treasury force Citigroup to declare bankruptcy, like they did with Lehman Brothers? Oh, never fear: Citigroup's international status, with branches in 100 countries around the world, made it "too big to fail." Okay, so did the Treasury consider seizing Citigroup, booting out its CEO and upper management, and selling off its assets--in effect fully nationalizing it, as they did with Fannie Mae and Freddie Mac? Of course not. This is the Bush administration we're talking about.

Yet, a bank seizure would have made the most sense. Even as Citigroup's stock price fell so low the company was valued at only $20.5 billion, the company itself claimed to have a $2 trillion balance sheet. Some of that could be asset-inflation, but the difference is mostly due to the perils of being a publicly-traded company and the vagaries of allowing shareholders to vote every second of every business day on the value of your company. Clearly, banks should never become publicly-traded entities that sell their stock on a major stock exchange. Period. It's a recent innovation, born of massive political lobbying by the banking industry since the 1980s that has thrown down the regulatory barriers for the entire financial industry. The experiment has failed massively, and it has to be brought to an end.

The quickest and easiest way to put the genie back into the bottle is for the federal government to seize control of troubled banks and nationalize them. They may be reprivatized later, but only after re-establishing the regulatory regime that existed prior to the 1980s. Yet this is the absolute reverse of what the Treasury and Federal Reserve are doing. Their strategy of pouring cash into banks with no strings attached while guaranteeing bank debts is being called sarcastically the "finger in the dyke" method by their critics. Yes, it's an attempt to roll back the clock to 2005, when banks were flying high, making enormous profits, and extending loans to anybody with a pulse. It's also strategy that will only dig us deeper into the hole.

Likewise the Federal Reserve's announcement that it will loan $200 billion to institutional investors, including hedge funds, so they can buy up securities backed by commercial loans (credit card debt, auto loans, etc.) is an attempt to roll back the clock. They're trying to remove some of the glut of debt from the financial system so that consumers can, yes, rack up more debt under the guise of boosting consumer spending, an activity that accounts for about two-thirds of all US economic activity. Instead of acknowledging that consumer debt levels are too high and that Americans will have to work more, save more, and pay down their debts, the Federal Reserve is trying to hook us all on more debt. And they're not even doing it in an effective way.

If you want Americans to spend more, you should give them more money to spend, which is why an economic stimulus package might help. Maybe. It won't be enough, but it's a step in the right direction.

The truth is that, instead of trying to roll back the clock, we all have to admit that the US economy needs to shrink. Much of the money and wealth that Americans accumulated in the past decade existed only on paper, and we all borrowed against that wealth thinking we could sell stocks or sell or homes or refinance to pay off our debts. Now that the nonexistent money has vanished, we all have to adjust. The question is, who will have to adjust more: the poor or the managers of Citigroup and other big financial companies who hyped home ownership, drove up housing prices to unsustainable levels, and sold subprime and adjustable rate mortgages to people who didn't need them and couldn't afford them?

We need only look at the impact of the economic crisis on American households to understand why the Fed and Treasury's moves are having no effect on the overall economy. Americans' disposable income fell by 9.2 percent in the third quarter of this year, the largest drop since 1947 when the government started keeping records. Currently, 36.5 million Americans live below the poverty line, defined as $21,200 per year for a family of four, and that number may increase by more than $10 million before this crisis is over.

The crisis is effecting Americans' ability to even feed themselves. The number of people using food stamps has increased 9.6 percent (by about 2.6 million people) from August 2007 when the crisis first hit and August 2008, just before the recent sharp downturn. Food banks and soup kitchens are struggling to keep up. In 2007, more than 36 million Americans (12.2 percent of the entire population) struggled to feed themselves, with 691,000 children going hungry at some point during the year.

In October, the United Nations reported that major cities in the US have levels of economic inequality equal to cities in Africa, and the OECD reported that the US as a whole had the highest inequality and poverty rates of all but two nations (Mexico and Turkey) in a 30-nation survey that included most major developed and developing nations.

A real bailout package would focus on the root of the problem. It would relieve high debt levels for American families by reforming the recent "bankruptcy reform bill" that made it harder for Americans to get their debt forgiven and by unwinding and outlawing mortgage-backed securities which make it impossible for most homeowners to renegotiate their troubled mortgages. It would address the gross income inequalities brought about by 30 years of horrible political policies: from the Reagan administration undercutting unions and cutting corporate taxes, to the Clinton era budget-balancing that dismantled the social safety net for the America's poor, to the Bush administration tax cuts for the rich and pursuit of a fiscally ruinous War on Terrorism. It would end the regulatory vacuum that has led to loan fraud and criminal corruption in all levels of the financial industry.

Barack Obama has pitched himself as the change we need to see, but most of his economic advisors are former Clinton administration aides. The likelihood that he will bring about a real shift in economic policy seems slim at the moment, but one thing we know for sure is: if we don't speak up and demand what we want, we won't get it. Call your senator. Email President-elect Obama. Let them know what real change should be.