By James Murray, an American living permanently in Ajijic, Jalisco, Mexico. After having owned a business for 27 years, he now spends his free time musing on the world.
Crows are considered the most intelligent of the bird family. They can count to three. Anything over three is “many” to a crow. Humans are basically the same way. At some point numbers get so big that they just become “many.”
Everyone understands $100, how long you have to work to earn it and what it will buy.
A package of printer paper with 500 sheets is about 50 mm (2″) thick. Stack 2 packs of paper together and you have a stack of 1,000 sheets about 100 mm (4″) tall.
If you stacked up $100 bills 100 mm tall, you would have $100,000. Everyone understands $100,000. It will buy you a small house, several cars etc. If you are working, it could be one year’s salary or several years’ salary.
If you are watching TV and someone is being held for ransom and they only want $100,000 that sounds pretty small. A million sounds better, doesn’t it?
What does a million look like? Since $100,000 is 100 mm high, a million must be 1 meter (about 40″) tall. How much does one million dollars in $100 bills weigh? 10 Kg (22 pounds).
A million dollars is about the point where people begin to lose the concept of money. Very few branch banks ever keep over $100,000 in cash. Short of drug dealers and people in counting houses, very few people have seen a million dollars in cash.
However, most people have a pretty good idea about what a million dollars will buy. Several average houses, one million dollar house, 20 cars for $50,000 each, etc. A million is a pretty good sized number but still within human concept.
Several years ago, there was a movie where a casino was robbed and $160 million was stolen. Four guys, each carrying two bags walked off with the money. Oh, really?
If $1 million weighs 22 pounds then $160 million would weigh 3,520 pounds. Each of the four guys would have to carry 880 pounds. I don’t think so. The movie got away with that deception because no one in the audience had the slightest idea how large or how heavy $160 million would be.
Once you get over one million, very few people have any concept of the number.
A billion is 1,000 million. If $1 million is 1 meter high, $1 billion would be 1 KM (about 6/10 of a mile). No one knows what a stack of $100 bills a kilometer high looks like so let’s lay them down. Most people have a good idea of what a kilometer is in distance. You can walk a kilometer in about 10 minutes. So $1 billion equals a kilometer in distance.
The FED is injecting $85 billion a month. That’s a stack 85 kilometers high or long.
If we know $1 billion is a kilometer, what does $1 trillion look like? 1,000 kilometers (600 miles). This has been about the US Federal budget deficit and therefore the growth of the national debt in the US per year, over the last several years.
Now the debt is over $17 trillion. What would that look like? The distance from the North Pole to the South Pole is 20,000 kilometers. If you started at the North Pole, the bills would stretch 17,000 kilometers, or 10,400 miles, south toward the South Pole.
A year or so ago, Mexican authorities raided a drug dealer in Mexico and discovered a room about 10′ x 10′ stacked about 3′ deep in $100 bills. They didn’t state how much money was recovered, so I did a little math. It turns out that the room contained about $300 million.
In a year when the US is borrowing about $1 trillion, or about $115 million per hour, that room full of money would cover less than 3 hours of borrowing.
Politicians and central bankers rely on the fact that humans can’t really grasp very large numbers, and they rely on the fact that humans get used to not being able to grasp them. So when trillions enter the conversation, no one really knows anymore what that means. And politicians and the Fed get away with their shenanigans. By James Murray.
Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate “beer money.” I appreciate it immensely. Click on the beer mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.