The Gift….add the Marshall plan and ratchet down returns…

And we still get $38 Trillion the US would be wealthier without these programs. For the record the unadjusted number comes up to a monstrous $ 206 trillion. I raised the point of diminishing investment returns as the pool of funds accumulated. We adjusted for that. Adjusted down the amount of direct US contributions to Europe.

It’s a basic model. One could try to capture US benefits from a stable Europe

But there are also negatives, the rise of EUROPEAN industries eg auto’s which created trade deficits with negative feedback loops. So without a massive modeling effort we get some indicative answers Here’s the Chat interchange:

If you want one conservative estimate, I’d use:

That comes from making two downward adjustments to the earlier upper-bound model:

1. Cut the defense-support stream from $65B to $50B in 2026 dollars.
2. Cut the investment return from 10.5% nominal to 8% nominal to reflect the point you made about a very large capital pool eventually pushing money into lower-return uses.

Using your same inflation path of 3.6% back to 1946, a stream ending at $50B in 2026 implies a starting payment of about $2.95B in 1946.

Compounded at 8% nominal through 2026, that defense stream grows to about $33.1T.

For the Marshall Plan, the U.S. officially provided $13.3B to 16 European countries between 1948 and 1951.

If that four-year Marshall Plan flow is compounded at the same 8% nominal rate to 2026, it comes to about $4.8T.

Add them together:

1. Defense subsidy equivalent: ~$33.1T
2. Marshall Plan equivalent: ~$4.8T

So I’d round that to:

If you want an even more skeptical floor, I’d use 7% nominal instead of 8%, which brings the total down to about $22T.

My own view is:

1. Upper-bound stylized estimate: ~$206T
2. Conservative estimate: ~$38T
3. Very conservative floor: ~$22T

So if you ask me for the single figure I’d be comfortable defending as “conservative but not absurdly low,” it’s about $38 trillion.

Very funny. Even by this liberal board's absence of standards, it is very poor.

Related

Very funny indeed Tradhole.

Fact-check summary (short, direct)

The claim that the U.S. has effectively given Europe ~$22T–$206T (or ~$38T “conservative”) via the Marshall Plan + defence spending is:

? Not credible as an economic estimate

? Methodologically flawed

? Widely inconsistent with mainstream economic analysis

### 1. The core problem: compounding ? economic cost

The argument takes:

1. historical spending (Marshall Plan + defence)
2. then compounds it at 7–10% for ~80 years

?? This is the key error

Why this is flawed:

1. Compounding assumes:

“If the U.S. didn’t spend this money, it would have been invested at X% for decades”

That is not how public spending works

1. defence spending ? investable capital
2. aid ? foregone compound returns
3. government budgets are not sovereign wealth funds

### 2. Marshall Plan — real scale

Actual figures:

1. $13.3 billion (1948–1951)
2. ? $150–$180 billion today (inflation-adjusted)

?? Not trillions

### 3. NATO / defence spending claim

The post assumes:

1. U.S. “subsidised Europe” continuously
2. then treats that as a financial transfer

This is misleading.

Reality:

1. U.S. defence spending:
2. primarily serves U.S. geopolitical interests
3. includes:
4. global power projection
5. Cold War containment
6. trade security

?? It is not a “transfer” to Europe in the same way aid is

### 4. Double counting and misclassification

The model mixes:

1. defence spending
2. economic aid
3. hypothetical investment returns

?? These are not interchangeable

Example flaw:

1. U.S. military bases in Europe
2. ? counted as “subsidy to Europe”

But in reality:

1. they serve U.S. strategic positioning

### 5. Ignoring economic returns to the U.S.

The model only looks at “costs” and ignores:

Benefits to the U.S.:

1. export markets (Europe rebuilt = buyers of U.S. goods)
2. global trade stability
3. USD reserve currency dominance
4. political alliances
5. avoided war costs

?? These are massive and not included

### 6. The $38T figure specifically

This comes from:

1. assuming ~$50B/year equivalent “support”
2. compounded at 8% over ~80 years

?? This is not a recognised economic method

No serious institution (IMF, World Bank, economists) uses this framework.

### 7. What credible estimates look like

Marshall Plan:

1. ~$150–180B (today)

NATO / defence “burden sharing gap”:

1. varies, but typically:
2. tens to hundreds of billions per year
3. not trillions compounded

Even over decades:

?? You do not reach tens of trillions using accepted methods

### 8. Key logical fallacy

This is the central issue:

“Money spent = lost investment capital compounded forever”

This assumes:

1. zero domestic benefit
2. perfect investment alternative
3. no diminishing marginal returns
4. no strategic value

?? All unrealistic

### 9. Bottom line

The numbers:

1. ~$206T ? ? not credible
2. ~$38T ? ? still not credible
3. ~$22T ? ? still not credible

Why:

1. misuse of compounding
2. incorrect classification of spending
3. ignores benefits
4. not used in real economic analysis
5. 
   

### Final assessment

?? This is a stylised thought experiment, not a valid economic estimate

It can be useful for discussion, but:

1. it cannot be treated as factual
2. it overstates costs by orders of magnitude

LOL!

Someone got schooled!

So this is Sharkbot’s counter argument:

That is not how public spending works

1. defence spending ? investable capital
2. aid ? foregone compound returns
3. government budgets are not sovereign wealth funds

Ah but that is exactly the argument I’m making. Instead of the US spending the money to defend Europe, make Europe spend the money to do so. And then put the money, effectively, in a sovereign wealth fund to benefit the American people.

Or simply reduce taxes, the increased consumer spending and profits would eventually work their way through the system. But there is no way of quantifying this, so I use the sovereign wealth fund notion to quantify the benefits.

This woeful fact check then totally missed the point that the compounded amount actually produced a much higher mathematical number:

‘Upper-bound stylized estimate: ~$206T’

And that Chat took into account all the points made, like benefit of European recovery, primacy of the dollar and a point I raised, declining rates of return to the investment dollar with compounding principal. After factoring all those points and several others it reduced the mathematical answer of $ 206 trillion to $38 trillion.

That analysis, is far more sophisticated than silly stuff like ‘this is not a recognized economic method’….and other the drivel which Shark Bot produced. It misunderstood the the objective, missed the actual calculation by a factor of 5 and missed the fact that reverse benefits were included in the calculation. Embarrassing really

Stick with moz and ChatGTP……ROFL.

Looks like 2 people just got schooled again…ROFL

Moz, do you use bold when you're feeling a bit foolish and angry?

I think this is the pertinent point:

"This is not a recognised economic method

No serious institution (IMF, World Bank, economists) uses this framework."

Maybe you should claim your money back from Kelloggs? Tell them they owe you a trillion dollars.

It’s not a pertinent point. Of course no governments would use their money this way. If the US hadn’t funded European defense in the enormous amounts they did….taxes would have been lower, the US debt would have been massively lower, and pet projects which typically had lower returns would have emerged.

I’m calculating a theoretical present value of the American subsidy of European defense. The cleanest way to do that is to put the funds into a sovereign wealth fund and accumulate them.

And the calculation is very simplified using smoothed expenditures. The actual path was low subsidies right after WW2, with massive increases in the Cold War period. Because of compounding of the earliest numbers that reduces the theoretical number to $21 trillion. I just asked Chat for that calculation. And there are other tweeks we can make.

But the benefit to Europe is much bigger….the $21 trillion of direct contributions, but they also benefitted from all the indirect spending the US made. It bought their independence

It’s interesting how the models struggle to ad lib, they want to reference existing calculations, not follow ‘what if’ investigations. But they are incredibly helpful in quantifying questions

But I like the sound of a trillion dollars….I use bold when I’m showing off!

@Mozart, paste your own comments at the start of this thread into ChatGPT to fact-check. You will get the same response as I provided

Like Trump, you build an argument on a faulty premise. It is like saying if (1 + 1 = 3), then x = y

So much liberal non sense in this thread. Earlier studies show that the use of A.I makes people dumber. Maybe they are correct.

the US debt would have been massively lower

No. The US debt has been a deliberate strategy. It has nothing to do with the Marshal plan.

We can build a much more realistic model using:

1. Approximate % of U.S. defense spending allocated to Europe by decade
2. Actual U.S. defense spending by year
3. Then run the same compounding exercise

That will give you a much tighter, historically grounded estimate—and likely reduce the total materially.

Let’s build that model….this is interesting

Thought for 3m 26s

Yes — and the first thing to do is throw out the smooth 3.6%-from-1946 path.

A better model has to reflect the actual posture history:

1. 1946–49: sharp demobilization, occupation costs, but no full NATO-style permanent shield yet.
2. 1950s–1980s: large Cold War buildup. Heritage’s long-run troop dataset says Europe absorbed 52% of all U.S. overseas troop billets from 1950–2000; U.S. troop levels in Europe averaged 311,870 in 1986–1990, and West Germany alone hosted about a quarter-million U.S. troops for decades.
3. 1990s: big drawdown after the Cold War; Europe fell to an average 109,452 U.S. troops in 1996–2000.
4. 2015 onward: renewed buildup via the European Deterrence Initiative; GAO says $35.1 billion was spent under EDI from FY2015–FY2023.
5. 2025: the U.S. still had over 100,000 troops in Europe.

And the Marshall Plan should be modeled separately: the U.S. State Department gives the official figure as $13.3 billionfor 1948–1951.

First-pass conservative model

I’d use these 2026-dollar annual equivalents for the Europe-defense subsidy stream:

Why these are conservative:

1. they keep the postwar years low,
2. they put the Cold War peak well below a simple troop-for-troop extrapolation from today,
3. and they keep the post-1990 period materially lower even after the Russia-driven rebound.

For returns, I’d use 8% nominal, not 10.5%, because of the diminishing-returns point you made.

Result of that model

Using:

1. the era schedule above,
2. 3.6% inflation to translate each era’s 2026-dollar subsidy back into then-year nominal dollars,
3. and 8% nominal reinvestment to 2026,

the Europe-defense stream compounds to about:

Add a separately compounded Marshall Plan:

1. Marshall Plan at 8% nominal to 2026: about $4.6 trillion.

So the combined total is:

How I’d interpret that

Under this more realistic, historically shaped model:

1. the old $180T result is too high,
2. but the U.S. contribution still looks enormous,
3. and a conservative first-pass “gift” estimate is roughly:

Sensitivity

Using the same historical shape:

1. at 7% nominal, the combined value is about $15.4T
2. at 8% nominal, about $26.6T
3. at 9% nominal, about $46.8T

So the claim survives the model revision, but in a much tighter range:

A defensible conservative estimate is about $27 trillion, not $180 trillion

Both Chat and I have come up with reasons to make the number more conservative and reached the conclusion in the post above.

There is no faulty premise, all you are saying is money wouldn’t be used in that way. I agree. But it could be used in that way….Saudi has done it, Norway has done it. And if it was that’s the value of the benefit.

your 1+1 =3 is just the rambling of some one who has no idea of what is being modeled

Here’s an example of how your lack of understanding prevents you from asking the right questions and guiding Chat. Here’s the supposed rebuttal:

### 2. Marshall Plan — real scale

Actual figures:

1. $13.3 billion (1948–1951)
2. ? $150–$180 billion today (inflation-adjusted)

?? Not trillions

The Marshall plan gave Europe $13.3 billion in 1950 approx, which if you inflated it at 3.5% approximately would in fact give you something like $150 billion in 2026. That means you have invested in an asset that has no real rate of return, you are just expressing the $13.3 billion in 2026 dollars.

But that money would have earned a vast return if invested in the economy. I started with a 10.5% return, which is the actual S&P return over that period, if you add dividends to capital appreciation.

But I decided to use the more conservative 7% real rate of return, eminently achievable with a very conservative portfolio. So I gave that to Google to get an independent answer. Here it the result:

value of

$13.3 billion after 75 years at a 7% annual rate of returnis approximately $2.13 trillion.

The way you asked the question prompted the model to give you the value in 2026 dollars….the way I asked the question prompted the model to give the value if invested, a combination of inflation and a real rate of return.

You have to ask the right question

But that money would have earned a vast return if invested in the economy. I started with a 10.5% return, which is the actual S&P return over that period, if you add dividends to capital appreciation.

And of course, this return had nothing to do with the fact the US had spent money on Europe. Everything else would have remained equal.

It is very funny. Liberals have such a failed perception of themselves. It is weird, as the world is in a middle of a global crisis that underlines the weight of the US military bases in their USD con.

There is nothing to discuss with liberals. It seems they have fallen over, and they believe their own lies.

And of course, this return had nothing to do with the fact the US had spent money on Europe. Everything else would have remained equal

Here’s Chats view of the Marshall plan benefit:

Add a separately compounded Marshall Plan:

1. Marshall Plan at 8% nominal to 2026: about $4.6 trillion.

So no, everything didn’t remain the same, my conservative interest rate assumption more than covers any marginal feedback effects if Europe hadn’t been given this extra bit of free money.

Try again,

.

Very nice but doesn’t it overlook the retreat from Moscow, Waterloo, the Franco Prussian war, Bataille de France and Vietnam. One might say the Battle of Ligny in 1815 was the last time they weren’t thrashed.

.