Wiredog says:
A couple years ago someone asked me, as an aid to visualizing the budget, how many transport flights it would take to move $1T worth of $100 bills.
So $1T is 10B $100 bills.
10B grams is 10M kg
120,000 kg is the capacity of the C5 Galaxy aircraft. So it would take 84 flights to move $1T in $100 bills.
The Galaxy C5 is (she said with stunning understatement), not a small aircraft:
Meanwhile, Colonel Sanders notes:
Imagine you're given $1T on the day Jesus Christ was allegedly crucified.
You spend $1M per day, every day, 365 days a year without stopping for any reason.
As of today, you would still need around 700 years to be completely out of money.
Don't worry, though--I assume when you do run out, there will be a government program to top up your funds.
"Perhaps this is a problem with inflation in both our currency and the size of our government--the spending figures are now beyond any normal person's imagining."
Really? I think they are pretty easy to understand when you compare them to other large numbers. For example, to get a sense of the amount of money spent so far on the bailout, compare it to the size of the U.S. economy, the size of last year's federal deficit, the size of our currently outstanding debt, etc. That makes a lot more sense to me intuitively than trying to physically picture that many hundred dollar bills -- especially since barely any of that money will ever exist in paper form.
The size of these numbers.... It's incredible.
Look I know that people really want to avoid words like "fraud" in this instance, and I don't think that it's fair to say that the executives at many of the financials involved in this crisis are literally guilty of fraud. (Just utter irresponsibility and neglect.) But AIG, specifically-- I mean if you are an insurer, and you say to people and businesses, "We will cover you financially against certain risks," and you can't even come close to actually covering those risks to the degree that you are obligated... isn't that just fraud? I understand that no insured carries anything like the amount of money they would need to cover every policy they hold in the event they all made claims. But AIG was short by hundreds and hundreds of billions of dollars. I mean they couldn't even approach actually covering the risks that the were contractually obligated to cover. Isn't it fair to call that fraud? I do think degree matters, here.
Here is some more perspective:
http://mjperry.blogspot.com/2009/03/what-does-1-trillion-look-like.html
Here's a more thorough version that uses the same graphics to take you from $1 million to $100 million to $1 billion to $1 trillion. It's the best illustration I've seen:
http://www.pagetutor.com/trillion/index.html
A very minor point but why use the day Jesus was crucified as opposed to when he was born?
I don't care - use whichever you like. Just give or take 34 years.
Oh please, you're smarter than this Megan (that's a compliment, I swear).
These analogies are ridiculous. Take, for example, the Jesus Christ one. So, it would take around 700 more years to completely run out of money? Well fine then. That means if you were given $14 trillion the day Christ was crucified (you know, the size of the U.S. economy) it would take approximately 35,800 years before you run out of money ((2000+700)*14-2000). Oh, and I can make that number sound even bigger than it is. 35,800 is around 3.5 times as long as human civilization has even existed. All of a sudden, $1 trillion doesn't sound as large, does it?
These silly games (how many times can you go around the earth if you lay the budget end-to-end in $100 bills? how many times to the moon and back? etc) are utterly meaningless taken out of context, i.e., what's the size of the deficit or the budget against the GDP? It's meant to replace real, substantive arguments with emotionally shocking numbers (or what lawyers might call "shock the consciouse" numbers).
What it's meant to do is simply give people an idea of the size of the amounts of money we - through our government - throw around without thinking.
From the tone of your post, I assume you think it doesn't matter that our debt is more than $10 trillion. I think it does matter. I think it matters that kids - like my children - are being taught that wealth comes not from hard work and risk, but from a government printing press.
So in essence, yes - It's to "shock the consciouse(sic)"
Just to shock you some more, here's a chart from Nickolas Rapp tracking all the money the US government has allocated and spent for bailouts and what-not:
http://nicolasrapp.com/wp-content/uploads/2009/03/govt_ok.jpg
If it doesn't matter to you, just ignore it - Maybe it'll go away.
I do think it matters that our debt is more than $10 trillion (note, though, that Republicans didn't think it mattered when they were in control, and they won't think it matters again if they ever get back in control). My point is that these analogies do nothing to explain why it matters. It's just meant to create a visceral reaction: "What?!?!? I would have to spend $1 million per day for another 700 years, on top of the last 2000 years, just to burn through $1 trillion? My god, that's a heck of a lot of money! I oppose fiscal stimulus and universal health care!" It has nothing to do with substantive debate.
As for your children learning that wealth comes from hard work and risk, the unregulated shadow finance system is the one that tried to teach them otherwise. Remember, the whole reason we got into this mess is because everyone supposedly believed that they could make more money on less risk and less hard work. From homebuyers who thought there was no risk with a zero-percent down, option ARM because real estate prices only go up, to speculators who thought they could retire before 40 by flipping homes, to subprime mortgage lenders who thought they would never suffer the consequences of defaults because they could just sell their mortgages, to Wall Street who thought there was no risk in MBSs and CDOs because real estate only goes up and because the risk was diversified away, to hedge funds who thought they could always have positive positive returns with less risk (idiots, they didn't even take Finance 101), etc. Don't blame the government for what laissez faire already taught your kids.
And last of all, since when has government under Obama said there was no hard work and risk in what it's doing? Has Bernanke not conceded the inflation risk? Has Obama not said it will take a long time to get out of this mess? Does not the ultimate success of a carbon tax system require sweat, blood, and tears in private industry creating a green industry (once the externality of carbon emissions is accounted for)? Does not investments in education depend on the notion that people will go to college, work their butts off, and do well in school? I'm not saying you should necessarily be supporting these policies. I'm just saying it's acknowledging hard work and risk.
Republicans are the ones who believe you get something for nothing: cut billions of dollars worth of taxes and don't worry about the deficit, revenues will actually be higher! Business can regulate itself, we don't need government intervention! Let's all go to Iraq, it'll be a cakewalk, and the oil will pay for the war!
And libertarians are no better: no government, no regulations, no taxes, and everything will work just perfectly. Exhibit A: Credit ratings agencies! Oh, wait, um, I withdraw that exhibit, and I'll submit exhibit A as soon as I can come up with something.
If you honestly believe and will sit there and state with a straight face that "laissez faire" is what got us into this mess, then you're part of the problem, not part of the solution.
Yeah, you really can't talk about huge numbers like a budget without also talking about other huge numbers, like a population. So, a million dollars can buy everyone in my town...a Coke. A trillion dollars can buy everyone in the world...a few barrels of oil.
I agree with jt (and second Janice).
A trillion dollars is somewhat less than twice what the US has spent on the war in Iraq.
Does that make a trillion more or less impressive?
It will have a total cost of 3 trillion, according to Joe Stiglitz. He says it's a conservative estimate...
I've already heard these (and the stacking a mile high or whatever) multiple times. Mostly because McConnell and Boehner and many others used them over, and over, and over again during the stimulus debate. Lots of pretty charts and everything!
Here's the thing. I know there are the Norquist types here that want to drown the government in a bathtub. But a lot of people, especially "small government conservatives" didn't show the slightest bit of concern for deficits, or spending, or what a trillion dollars was *once* until they were out of power.
And that just smacks to me of disingenuity. Nobody mentioned how high you'd have to stack bills to pay for Iraq. Nobody mentioned how we'd have to go back to BC to make up the revenue from tax cuts. Republicans yelled "deficits don't matter" from the mountaintop until the second they lost, then it's "you're burdening our children".
Now, I know Megan isn't a Republican. And most of you probably aren't either. But you're getting these lines from Republican talking points, and they very clearly don't give a damn about spending or deficits unless they're not the ones making them. If you do, and you did for the past eight years just as loudly, I salute you, but you're in a very small minority. Most of the people spouting this crap cannot be taken seriously in the least.
You expect intellectual honesty? Come on!! When was the last time Republicans were honest about anything? When they admitted Boss Limbaugh rules their world?
Adam,
Don't all the charges of hypocrisy you level at the Republicans work equally well (if not better) when leveled at the Democrats? Were'nt Reid, Pelosi, et al, railing against the Bush deficits (even as they controlled the purse strings for the past two years)? Yes, they were.
However, your charge of hypocrisy fails to recognize the possibility that one's view of deficits might reasonably and legitimately change based on the size of the deficit. As a percentage of GDP, Bush's deficits were large, but were within the range of deficits run in prior years during peacetime. Bush's deficits are small when compared to deficits we've run in other times of war. In contrast, Obama's deficits in absolute terms and in percentage terms are the largest our country has ever experienced in peacetime. IIRC, those deficits are projected to be even larger (on a percentage basis) than those we had during WWII.
In other words, it's not hypocrisy to feel comfortable with a debt load equal to 35% of your monthly income and to feel quite panicked about a debt load that may exceed 90% you monthly income. Despite what your wife may have told you, sometimes size does matter.
It's a bit misleading to point to Bush's deficits compared to GDP, because he just never put any of the war spending (which was quite a bit) on the budget. That's why his deficits are small compared to other war deficits. He also used a variety of other accounting tricks (like the yearly AMT patch) to make his deficits look smaller than they actually were. Obama's budget is larger in part because he's being honest about what we're actually spending, though I hear Conrad is trying to use the tricks to make it look like he's doing something. Anyway..
A deficit of the size Obama proposed would be unconscionable in a healthy economy. You want something where the yearly deficit is around 3% of GDP, if I recall. But this isn't a normal situation. I know it's convenient to say "hey, we're in a recession, guess you can't actually afford anything you said you were going to do", especially after the last administration paid no such heed, but he feels it's crucial for long-term growth to spend in the short-term.
Now, ideally you'd fix up the deficit with increased revenue generation, since neither party has anything they really want to cut. But a small tax increase on the top bracket has a fourth of the country up in arms about socialism and wealth redistribution, so it's hard to see where an appropriate amount of revenue can come from right now. Given that, large deficit spending seems like the best option of those that are feasible, assuming the primary goal is long-term growth and the revenue that brings.
Adam,
You're admitting that the charge of hypocrisy you laid on Republicans is baseless? Now you're pointing out the nuances of each party's positions that make deficits acceptable in some circumstances and undesirable in others. You just prefer one party's policies and priorities of the other's. That the other side to the discussion disagrees with you does not make them hypocrites.
It's true that the Republican Party as a whole (as opposed to some individual deficit hawks) only cares about deficits when it's out of power. Unfortunately (unlike some issues where the parties switch off according to who's in charge) when the Republicans are in power no one cares about deficits at all.
That suggests that the deficit should be smallest when the Republicans have a majority in Congress but not the presidency, so that they can exercise opposition rather than enact their own wish list. And that certainly reflects the experience of the last few decades.
I ask respectfully: what is the point of reinforcing the idea that we are talking about a LOT of money?
The underlying assumption is that there is no concern, or worse, flippancy, in allocating a trillion dollars. I don't sense that on the part of anyone who has a professional involvement in these matters. Even those with a casual interest are paying attention.
Most citizens understand macro-economic functions in terms of micro-economics: they manage their household budgets or their business, and apply "common sense" principles to macro-economic discussion. This sort of discussion is a form of fear-mongering that creates an emotional reaction: "Good Lord, we're spending a lot of money!" Yes, we are, but it isn't the same as going out to eat and then to the theatre. This is macro-economic activity, folks.
It would be most productive to be ensure that money allocated for fiscal stimulus/federal government/federal programs is used according to maximum utility. Of course, there will be debate on this. Excellent: let's debate the utility of the expenditure. Then we will be able to intelligently decide if it is flippant or not, rather than react emotionally to the idea of a "whole lot" of money.
The underlying assumption is that there is no concern, or worse, flippancy, in allocating a trillion dollars. I don't sense that on the part of anyone who has a professional involvement in these matters.
Which "sense" are you using? The fact that no one in Congress had time to read the "stimulus" bill before voting on it doesn't qualify as flippancy?
No, because Congress (the body) did read the bill. Congress exists as a collective for a very good reason. Your comment implies you believe that every individual member of Congress reads every line of legislation.
Context...
I came up with the numbers when a guy wanted some help visualizing what the numbers in a WaPo article from 2 years ago actually mean.
The article:
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/07/AR2007030702502_pf.html
The numbers that generated the request:
Note that the article was written 2 years ago, before the current economic problems were at all appreciated.
I don't need to debate the "utility of the expenditure". To me it's a given that the government - Republican or Democrat - has a less than .000001 percent chance of actually spending any money on anything that makes any damn sense. If they remain true to form, they will do nothing but make sure their friends get paid.
The only way to accurately allocate resources where they're needed is to let the market do it.
Printing money and handing it to your friends, or even dumping it out of helicopters, is not going to do anything to "stimulate" the economy.
We got into this mess because of the government channeling resources into areas they shouldn't have and creating a bubble. Now they want us to believe the cure is the same as the disease.
I'm not buying it.
Needless to say, that wasn't supposed to be a reply to wiredog...
A trillion is a meaningless number. But $3,000 is a number we can all relate to easily enough. And $3,000 for every man, woman, and child in the US is what a trillion is, assuming we pay in cash rather than credit; compound interest can really add up. It also assumes a uniform "head tax"; anyone making good money will of course pay more.
Three-hundred and six million (give or take a few hundred thousand) is also a meaningless number to normal people. Most don't even know the names of more than one thousand people.
The point is to conceptualize what it means to you and yours, which requires dividing money played with by government by the number of citizens subject to that government.
If the government invents a trillion bucks for a stimulus program, then approximately $3k is being created in your name. Are you going to get $3k worth of benefit out of it? How much of the $3k principle will disappear through inflation, versus how much you and your descendents will have to create through taxes? How much interest will you and your descendents have to pay on that $3k through taxes? Etc.
Obviously it doesn't work out exactly that way in practice since tax rates are not uniform, even accounting for taxes paid by employers outside of payroll witholding. But it's a reasonable enough method for conceptualizing.
I learned something about the value of money forty years ago at the American Jersey Cattle Club National Heifer Sale. Most of the heifers were selling for less than $1000 at the auction. Suddenly one sold for $5000, then another for about that price. My father laughed and explained that the two owners had just exchanged checks with each other so that they could advertise in the Jersey Journal that their heifers had sold for a high price. The money only appeared for the time it took the two checks to clear. So, what a million or a trillion dollars is like depends on the time that the money actually exists, and the value of the money is proportional to that time, which makes multi-billion dollar transactions in credit default swaps inscrutable and meaningless to an outside observer, I suppose. The numbers are enough to make a person laugh, so I understand those who have that reaction.
This is a comparison I have always found most useful and illuminating:
Millions, billions and trillions all sound the same.
But a million seconds takes about 11 days to expire;
a billion seconds takes about 30 years to expire;
a trillion seconds takes about 30,000 years to expire.
Like Stewie, I have always found the comparison through increments of time to be the most illuminating, and it astonishes me still (even more than 30 years since I first made the calculation) what a length of time a trillion seconds is.
I guess people can commemorate their billion seconds when they turn 30. It's slightly less depressing...
Reminiscent of Bill Bryson's technique in A Short History of Nearly Everything.
My favorite was condensing the history of the planet Earth into a 24-hour period. Humans show up on the scene about 5 till midnight.
Peggy Noonan had a column a while back about people recalling things that were a consequence of inadequate finances in their personal lives as the country goes into contraction. So one thing is that people feel a sense of 'there's me, insignificant, and an all powerful government which can grant my wishes or destroy me.' This is part of the anger over the AIG bonuses; 'but what about my wishes' is the back story. Hobbes talked about in a 'state of nature' that people had relatively equal strength, and, I think, that has informed our culture up until now, the 'median' citizen has felt equal to others. Perhaps it was not so for minorities. And now we have a black president who will take care of 'who he should' but that is also 'who he wants to' and the median citizen is very little compared to, oh say, the new Leviathan.
I always think of a million being about half of what I need to buy a lakefront property where I live.
With a billion, that lakefront property is a rounding error.
With a trillion, buying the lake and all the property around it is a rounding error. 13 of them buys the US economy for a year.
Don't ever think that anyone in Washington is unaware of these facts. There will be many lakefront properties change hands as a result of this spending.
Derek
These analogies don't seem very useful to me. 84 planeloads of $100 bills is totally meaningless to me as a measure of value. It's much more meaningful to say that a trillion dollars is $3,300 for every man, woman, and child in the US, or roughly twice that much for every labor force participant. Or that it's 7 cents out of every dollar's worth of goods and services produced in this country.
Knowing that the government took 40 cents out of every dollar I earned last year enrages me a lot more than some contrived story about airplanes ferrying pallets of $100 bills around.
84 flights doesn't sound like that many.
Freddie-
I mean if you are an insurer, and you say to people and businesses, "We will cover you financially against certain risks," and you can't even come close to actually covering those risks to the degree that you are obligated... isn't that just fraud?
"I mean if you are a 'California Governing body' with "obligations" that you can't even come close to actually covering (Do you really need a link?)- and you also "allowed" 'the people' to vote for a new $10 billion train set (California Issue 1A 2008) ... isn't that just "fraud"?
I can only hope California dies in it's own feces (or the Latino version of the same). Us "flyover people" finally learned what was killing our hogs and chickens in '79 (that's 1779!)-
Pablo,
nice check-kiting story, it does happen. though, that is Not what's happening here.
MM,
care to discuss:
Simon Johnson’s article “Triumph of the Oligarchs” in the Atlantic.
http://www.theatlantic.com/doc/print/200905/imf-advice ??
By not putting the costs of the 'war on terror' on budget, Mr. Bush followed in the footsteps of Presidents Johnson and Nixon. The stagflation of the Carter administration, finally brought under control by Paul Volker, has been attributed to the 'monetization' of this Vietnam war debt.
I suggest that we visualize $10T as the estimated value of all residential mortgages in the US, and half the value of all residential property. In other words, you could use 10T to pay off the mortgage of everyone in the country, or to increase the inventory of existing homes by 50%, making a home an entitlementhere.
While it is unfortunate that so many C-5s are required to transport the debt, remember, we have a number of supertankers which, due to the downturn, are not currently being used.
As someone who works closely with very large sums on money on government contracts, a trillion is still an incomprehensible amount of money, and the time analogy is effective at showing that.
To put it in a slightly different tangible context, $1 Trillion could buy 50 Manhattan projects or 10 Apollo projects, start to finish. Both of those investments happen to be keystones for why we have personal computers, cell phones, and an IT industry today, and why the USA retained a dominant economy through the last 50 years despite lower labor cost around the world.
For a more current comparison, $1 Trillion could buy between 10,000 and 15,000 F-22 raptors (depending on assumptions of per unit cost with such high quantities.) Note the current debate over that program is talking about 183 vs 381 fighters, with a projected impact of 95,000 jobs.
$1 Trillion dwarfs the debates over huge military procurement contracts, let alone the much smaller Science and Technology programs that can immediately create jobs (in a fully regulated system with existing oversight and contracting procedures) while advancing our country at the same time. Yet no bailout money is permitted to go to any of that...