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What’s in a trillion?

October 8, 2008

I am impatient with innumeracy, but I can understand it. Radio talk show hosts can’t keep their millions and billions straight: a $700 million bailout or a $700 billion bailout–what’s the difference?

A billion is a thousand millions (nine zeros). The $700 billion bailout equals seven-hundred-thousand millions of dollars, or $700,000,000,000.

A trillion contains 12 zeros. The $700 billion bailout represents seven-tenths, or .7, or 70%, depending on your notational preference, of $1 trillion.

Your calculator will not negotiate an equation in the billions or trillions unless you have scientific notation–and at that point, you don’t see the zeros anyway, so the concept remains abstract.

The idea of our government commandeering $700 billion to pay off ill-gotten debt is as abstract as it is appalling. It isn’t a number that is human mind-friendly. We think it sounds familiar, because we hear such numbers in economic contexts all the time, but we still lack real context for the meaning of such numbers.

We know what a second is: not very much time. American economist Thomas Sowell provides context for a trillion in this brain-friendly analogy:

“The assets of American banks passed the $10 trillion mark in 2004. One way to visualize such a vast sum is that a trillion seconds ago, no one on this planet could read or write. Neither the Roman Empire nor the ancient Chinese dynasties had yet been formed and our ancestors lived in caves.” (Thomas Sowell: Basic Economics, p. 342)

Astronomers invent terms to express inconceivable numbers. A “parsec” is 19.2 trillion (19,200,000,000,000) miles, equivalent to 3.26 light years. Perhaps economists need to get with it and come up with some cute new words so we can express our debt more palatably. The $700 billion bailout could be expressed as .036 parsec dollars, but it would nice to have a proprietary economic term. .04G for Greenspans looks modest enough. Or .04B for Bernankes, or .04P for Paulsons–any unit would do. The point is just to keep it looking miniscule.

The power to print money is arguably the government’s most awesome power. A President can truly promise not to raise taxes. He doesn’t have to raise taxes if he orders more money printed. But if he prints more money, he in effect raises prices, instead. Recall the Weimar Republic of 1920s Germany. Between 1920 and 1923, Weimar printing presses savaged the mark from 40 to the dollar to 4 trillion to the dollar. “Starving billionaires” was no hyperbole.

In January, Treasury Secretary Paulson, “looking ahead,” called unemployment low, our economy sound, and long-term economic fundamentals healthy. Now, it seems that American retirement accounts may have lost $2 trillion in the present meltdown–probably not a sign of rigorous health.

Perhaps Secretary Paulson should look behind a bit, and deal with some really big numbers here on Earth.

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3 Comments
  1. Jane permalink
    October 8, 2008 8:02 am

    Alas, few people learn from history. Man is prideful enough to look upon the works of men in the past with scorn, “It will never happen to us (me)”. Those of us who, as best we can, examine all things carefully tremble somewhat at the possibilities that are ahead…but Psalm 33:18 and following is a great comfort: “Behold, the eye of the LORD is on those who fear Him, On those who hope for His lovingkindness, To deliver their soul from death, and to keep them alive in famine.” We may literally be trusting Him for our daily bread in the times to come.

  2. October 10, 2008 3:29 pm

    Billion, trillion or a google, what’s the difference? It’s just paper. We have a monetary system that is built on absolutely nothing, that is, unless you really believe paper is money. A more perfect system of “uneven weights and measures” has never been devised. I’m sure you know what God thinks of nations that perpetrate such fraud. I can’t think of a scale big enough for that.

    Blessings – Sean

  3. October 10, 2008 3:36 pm

    Amen: paper isn’t money, and money isn’t wealth. Money can only transport other values into wealth if there’s a marketplace in action. Government posing as a marketplace is fraud per se.

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