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  • What is a trillion dollars?

    Posted on January 17th, 2009 cwmoore No comments

    A trillion dollars is what the USA will be in deficit spending for the next several years and maybe a decade.  Can you visualize a trillion dollars?  As an engineer I deal with numbers that are very large and very small.  I really have trouble understanding what a trillion $ really means.  Here are some examples:

    A trillion dollars = $1,000,000,000,000.

    That’s 12 zeroes to the left of the decimal point. A trillion is a million million dollars.

    The U.S. government spends more than the entire Gross Domestic Product (GDP) of Australia, China and Spain combined. If you laid one dollar bills end to end, you could make a chain that stretches from earth to the moon and back again 200 times before you ran out of dollar bills!

    One trillion dollars would stretch nearly from the earth to the sun. It would take a military jet flying at the speed of sound, reeling out a roll of dollar bills behind it, 14 years before it reeled out one trillion dollar bills.

    American workers now net almost 30 percent less in real wages than they did in 1973. After taxes, two paychecks in a family barely equal the relative purchasing power one had thirty years ago.

    How will the government pay for this deficit spending?  They will have to print money.  What happens to money that is printed and not supported by real productivity or physical goods?  It dilutes the existing money that is in circulation.  This means that it will take more money to purchase the substantial items that really do exist at that time:  Another word for this is called Inflation.

    Now what happens when an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a period of time?  It is a term called Stagflation.  This type of stagflation presents a policy dilemma because most actions to assist with fighting inflation worsen economic stagnation and vice versa. Second, both stagnation and inflation can result from inappropriate macroeconomic policies.   People, it is a very thin and light weight tight rope we are walking so prepare for the worst and start stocking up food and seed stock for gardening.  You will probably need them to weather this storm that is upon us.