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Thursday, March 26, 2009

Brother, can you spare a dime (or 100,000,000,000,000 of them.)

I’ve not been a very good blogger lately but I suppose works does come first. Sorry.

When I was a kid, I watched The Beverly Hillbillies. As you may recall, Jed went out hunting and struck oil. Jed and family were able to move into an opulent Beverly Hills mansion because they were millionaires. This is one of my childhood understandings of the world: millionaires were rich beyond my wildest dreams.

Now I’m all grown up and my wife and I make a nice living and maintain a nice lifestyle but nothing like the Clampets. We live in a pretty normal house, we have modest cars etc - the American dream. But, as odd as it seems to me, we will make as much money in our lives as Jed Clampet made from his oil well. A millionaire? Sure, I’d take a million if you offered it to me but I wouldn’t even quit my job for that kind of money. I’d just feel like I had a comfortable retirement nest egg.

About ten years ago, Dr. Evil came into the future and tried to hold the Earth ransom for a million dollars and the governments of the world laughed at him. Billionaires were the new millionaires. A billion dollars. I could live the Clampet life with that kind of money.

Then we went to war in Iraq. If you recall, the initiate budget request was in the neighborhood of $80 billion. That seemed like a flabbergasting amount of money. Did that sort of money even exist? Maybe that’s the point that we started losing track of how big these dollar amounts were getting. I don’t mean that to be a political statement about the war. It’s just that we argued about this staggering amount of money and then just kept coming back for more money time and time again: $54.4 billion, $70.6 billion, $21.5 billion, $58 billion, $40 billion, $60 billion, $70 billion, $100 billion. These are the actual estimates I’m finding online for the appropriations between 2003 and 2007.

Now, just a few years after we’ve come to terms with a billion being a lot of money its beginning to seem like little more than a down payment - hello trillions.
In an attempt to understand a trillion, I offer this website I found on Twitter.

That’s some Texas T.


Anonymous said...

WOW...that's quite interesting how much one trillion dollars really is when we see it as the website has shown it. I'll probably never get to see that amount of money upclose and personal during my lifetime, but I sure will continue to dream it up. Thanks for sharing that website as it really provided a good depiction of what a trillion dollars looks like.

I always wondered...why won't our federal government just print more money to float around in our society thus stimulating the economy and creating less workplace competition? I wonder what life would be like if the war didn't suck up so much money, our troops finally came home, and our deficit once again became our surplus. Oh well, so much for dreaming! I wonder if our economy will ever be repaired.....


Andy said...

I'm an economic dummy so don't even want to suggest that I understand this stuff. I do know (without fulling understanding) that printing more money would lead to deflation - I guess sort of like you can only cut a pie into so many slices. What's odd to me is that our money isn't based on something, like gold. I could see that having a specific amount of gold could only allow a specific amount of gold-based currency but what happens when you say that your currency is based upon the full faith of the US. I'm not sure but I think this faith is not ours in ourself but others in us. So, our currency is worth something because China is willing to accept it to repay our debt to them? I think it's over my head.

Anonymous said...

Lol...sounds decent to me since I don't really fully understand it either. One thing that I really can say is that I don't trust the government nor their reasoning.


Dan B said...

Printing more money leads to inflation, it devalues the currency. Paper money used to be backed by a corresponding sum in gold, i.e, like Andy says, you could exchange your paper money for gold or silver, which because of its scarcity will always have some value, even though that value might fluctuate.

Now our paper money's value is tied to intangible factors, like the country's stability and its potential, its inherent material wealth, and its output like the GDP (Gross Domestic Product). Printing more money without the "wealth" to support it makes it worth less, so the price of things go up and your dollar buys less.

Inflation wreaks havoc on savings, because the $1000 you might have put away for a rainy day a few years ago might only buy $750 now, especially if the interest rate doesn't match the inflation rate. If the economy doesn't rebound with enough tax revenue to fill back up the coffers, these trillion dollar deficits will of necessity lead to inflation. You can't keep spending what you don't have to spend, whether you are a government or a private person.

Although I like Jed Clampett, my favorite billionaire is Scrooge McDuck, because he likes to go down into the vault and roll around in the piles of money. Despite the economic downturn, Bill Gates is still the richest dude in the world, but he lost $18 billion and he's now down to $40 billion. Do you 'spose billionaires have charity benefits for other billionaires who've hit hard times?

Dan B said...

Read about the billionaires at Forbes:

My Daily List said...
This comment has been removed by the author.
Andy said...

Inflation/deflation - I knew I didn't undertand this. I was thinking that dollars would be worth less, hence smaller, therefore - deflation. I should really read a book:)

Anonymous said...

Andy, don't feel bad 'cause I'm with you on this one as I need to read a book about it, too. I can say, it's really interesting to see how the value of our dollar goes down when prices of so many things that we need continue to go up. Perhaps I should've taken a course in economics to learn more about this.

P.S. Thanks, Dan for schooling me on this issue. I learned so much and yet I have so much more to learn, but this will serve as my starting point. :-)