June 7, 2011

Mountains of Pennies

We are a little numb to huge dollar figures these days. When lotteries and game shows give away millions we tend to think that is not much money. It is.

When the press discusses Government finance we are faced with terms like billion and trillion. I just cannot get my mind around Obama's projected debt total of more than 14 trillion dollars. I am no math whiz. I am no financial whiz either. So I sat down with a pencil and paper and tried to put Government spending into a term I could understand.

Here is the Debt: $14,500,000,000,000. The deficit is triple what it was three years ago.

To better understand this amount, I have tried to shrink these huge amounts into a monetary figure I could grasp. Let us say a million dollars is the same as having a penny in your pocket. We may not know a millionaire, but we all understand that having a cold hard million in specie huddling down with the lint in your right front pocket would be a lot of money. So if you were a millionaire you would have a penny.

If you have the investment savvy of Hillary Clinton you might increase that million dollars into one hundred million. Maybe your Fat in Indiana stock split or something. Instead of that shiny penny smell you would now have a crisp new one dollar bill to buy some Fritos or pass to a sweaty stripper.

You have that dollar which represents one hundred million. You are rich in a professional athlete way, but you want NFL owner type wealth.  You want to be a billionaire. You trade that shiny one dollar bill for a ten-spot and you now are a billionaire. Just think, with a few shiny pennies you have millions, but it takes a sawbuck with a picture of Hamilton to be a billionaire! Yep if you had Bill Gates' wealth you would be worth $560! Again, compare that kind of money to a copper penny million.

Now we are getting into real money.  Government spending amounts. Obama and the Democrats saddled us with a $750 billion stimulus bill. Unemployment has remained steady, the value of the dollar has dropped, food and gas prices are souring. How much is 750 billion in our little currency game? As a millionaire you had a penny.  If you could pocket the stimulus you would have a check for $7,500 in your wallet. You could buy a used car for your teenager with that kind of cash. You could fill up your SUV with premium. Seriously, most Americans do not make that much money in a month.

Finally, we get to real money. The kind of debt the government has saddled us with. The kind of money our kids and grandkids are going to have to pony up. If We The People were playing penny ante poker, the pot just grew from a couple of pennies to $140,000! That is correct. If we make pennies in our lifetime, the Government spends the equivalent of the price for a cheap ranch prefab house in the country.

As I said, I am no math genius. How many people like Bill Gates would have to be taxed the entirety of their holdings -- $560 to come up with $140,000? I am telling you, there ain't enough rich people. So tell me again we need another stimulus. Explain to me how we are going to get out of this mess without some serious across-the-board spending cuts. If you have a mortgage of $140,000 and only have a penny in your pocket you have some real issues. You cannot spend your way out of debt. You can't borrow your way out of debt. Most of us will earn a few pennies at best in our lifetime -- if we are lucky. Compare that penny to what Obama and the politicians from both parties have spent. We are not talking hope and pocket change here.

Will you sleep better tonight?


Jim said...

That's one of the better dissections I've seen. thank you.

Starik Igolkin said...

Joe, thank you for the analogy, it's very visual.
I'm curious about this paragraph, though: "Here is the Debt: $14,500,000,000,000. That is triple what it was three years ago".

I've been crunching debt numbers for past couple of days, to disprove a couple of statements that Democrats make about the debt, and the Treasury Dept numbers I see for debt for past 5 years are:
9/30/2007 $9,007,653,372,262.48
9/30/2008 $10,024,724,896,912.40
9/30/2009 $11,909,829,003,511.70
9/30/2010 $13,561,623,030,891.70
Latest number (same source):
6/6/2011 $14,344,658,255,226.80

These numbers don't support the "triple of three years ago" claim.
In fact, according to Treasury numbers, last time the debt was 3 times less than today was in 1994. Do you have a different source that supports this claim?



Joe said...

My error, and a common one -- the deficits have tripled in the past three years.

deficit is the amount we are short each year, debt is the total we owe.

Starik Igolkin said...

Ah, ok, that makes sense, thank you.

Consider everything here that is of original content copyrighted as of March 2005