Tuesday, April 21, 2009

Crash Course: Chapter 11

HOW MUCH IS A TRILLION?


During the Crash Course you will often encounter numbers that are expressed in trillions. How much is a trillion?

You know what? I’m not really sure myself.

A trillion is a very, very big number, and I think it would be worth spending a couple of minutes trying to get our arms around the concept.

First, a numerical review.

A thousand is a one with three zeros after it.

A million is a thousand times bigger than that and it’s a one with six zeros after it. At this level I can still get my mind around the difference between these two numbers. A million dollars in the bank is a very different concept from a thousand dollars in the bank and I can really get that.

A billion then is a thousand times bigger than a million, and it’s a one followed by 9 zeros.

And a trillion is a thousand times bigger than that, and it’s a one followed by 12 zeros.

So a trillion is a thousand billions, which means it is a million millions. You know what? I don’t know what that means! I can’t visualize that, so let’s take a different tack on this.

Suppose I gave you a thousand dollar bill and said you and a friend had to spend it all in a single evening out on the town. You’d have a pretty good time.

Now suppose you had a stack of thousand dollar bills that was four inches in height. If you did, you know what? Congratulations, you are a millionaire.

Now suppose you wanted to enter the super-elite of the wealthy and have a billion dollars. How tall of a stack of thousand dollar bills would that be?

The answer is a stack only 358 feet high, seen here barely reaching 1/3rd of the way up the Petronas towers.

Now how about a stack of thousand dollar bills to equal a trillion dollars? How tall would that stack be? Think of an answer.

Well, that stack would be 67.9 miles high.

And I meant stack too, not laid end to end or anything cheesy like that. A solid stack of thousand dollar bills, 67.9 miles high. Now that’s a trillion dollars.

That still doesn’t do it for you?

Okay, I want you to imagine that you’re in a car on a roadway that is lined at the side with a sideways stack of thousand dollar bills. A nice, compact, rectangular column of thousand dollar bills is snaking along the roadside next to you as you drive, the whole way.

And you drive along brrrrrrrrrrrrr without stopping for a little more than an hour, and the entire way there’s that stack of thousand dollar bills right next you, on the side of the road, the whole way.

Said another way, the amount of money created in the past 4.5 months in our economic system, if it had been printed up as thousand dollar bills and stacked along the side of the road, would stretch from Springfield, Massachusetts to Albany, New York.

So there it is. Either you can visualize the stack better by driving along next to it, or by standing on top if it, or any other way you wish as long as you can find a way to express this statement in a way that's meaningful for you.

But make no mistake, a trillion is a very, very big number and we should not be lulled into complacency simply because it is too big to really get our minds around. That should drive us to action instead.

Keep this lesson in mind as we discuss the total accumulated debts and liabilities of the US, which are now many trillions of dollars.

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