Trillions and billions are numbers that both represent huge quantities, however, we hear them so often we forget the difficulty of internalizing the true magnitude and massive amount of money they really represent. Adding to the confusion is that many of the stories we see still refer to far lesser amounts such as millions. Please don't get me wrong, a million still represents a very large number but pales next to its much larger brethren a billion which in fact is a thousand times larger. This is all linked together by the fact it is insane to think governments spending far more than they take in each year sooner or later will not affect the value of assets.
|Real Assets At All-Time Lows Relative To Financial Assets|
|One million dollars (100 packets of $10,000)|
Believe it or not, the little pile next to the man on top is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag to walk around with it. Start talking about a $1 BILLION dollars... now we're really getting somewhere...
|A Billion Dollars Is A Great Deal Of Money!|
Internalizing the magnitude of the difference!A million is a large number. To put it in perspective think in terms of someone working every year from the age of 20 until they are 60 making $25,000 a year. Their total income over their life would be one million dollars. The magnitude of the difference between billion and million is important. Another way this difference can be illustrated is with the example below that uses time as a scale or measuring stick:
- A million seconds is 12 days.
- A billion seconds is 31 years.
- A trillion seconds is 31,688 years!
We will start by placing the population of the United States at 333 million people, (this number is reasonably close) and includes every man women and child. What makes this important is that it includes infants, children, teenagers, the nonworking both self-sufficient and those on government assistance, the retired, and the elderly in nursing homes. How marvelously simple and convenient that this number goes into 1 Billion dollars roughly 3 times.
This means that every 1 billion dollars spent by our government represents an outlay of roughly $3 for every person in America!
Taking the number of people and placing them into other groups is more challenging. Those groups can include; households or families--- for ease we will call the average household 3.4 people. When we look at "workers" we are looking at according to government figures in 2008, 120 million people were employed out of an estimated 330 million citizens. However, unemployment increased after that date. Last but not least how many taxpayers exist in America? This is very complicated, many taxpayers get back more in a refund than they pay in and there is a huge difference in the amount people pay, also do we consider a joint return as two payers? Bottom line, whatever it means, nearly half of households do not pay taxes. This we must remember!
Back to simplicity: So $100 billion represents or equals $300 per person and $1,020 per family,
Unfortunately, we are not talking about a $100 billion federal deficit but six or eight times that amount. One trillion dollars is ten times the $100 billion multiplied out above. That would represent a staggering $3,000 per person and $10,200 per family being spent each year, year after year, it adds up very fast! Again we must remember nearly half of American households do not pay taxes, and if they don't this means someone else must pay their share for them.
Sadly, these are the numbers propelling the economy forward, and it is not sustainable when compared to wages and incomes. Please note; Massively compounding the problem is the realization that most people such as infants, children, the disabled or unemployed could not pay their share if their life depended on it, this transfers the burden to the remainder of society. The bottom-line is that the numbers we see and hear are mind boggling and crazy. When you start talking about these numbers in multiples of thousands, tens of thousands, and even more the task of comprehending and understanding them becomes nearly impossible.
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Footnote; If you found this post interesting or informative please look at my recent posts. Also, nothing is as sobering as looking at the National Debt Clock, that link is also below. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged,