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Thursday, June 01, 2017

DENNIS PATRICK: COMPREHENDING BIG BUCKS

How big is “big?” How much is 100? 1,000? Who can comprehend a million of anything?

Suppose a couple celebrated 18,262 days of married life. This is a big number, but we usually state this in a more comprehensible way such as fifty years of marriage – a golden wedding anniversary.

Large numbers are easily understood when stated relative to a more recognizable quantity. This is another way of saying that by comparing a large number to some easily recognized point of reference seems to aid in comprehension.

Tax season has passed and the federal budget season is upon us. Numbers, big numbers, will be bandied about with slight comprehension of their significance.

If we wish to better understand a large quantity of money, for example $1 trillion, one way is to transpose money into time. Most people have some sense of the passing of time. For the sake of argument, let one dollar equal one second. Sixty seconds make up one minute and 60 minutes make up one hour. In one hour there are 60 seconds X 60 minutes or 3,600 seconds. A 24 hour day would yield 24 hours X 3,600 seconds per hour, or 86,400 seconds in a day. Most folks get the hang of it.

Continuing on, dividing 1,000,000 seconds (1 million seconds represents $1 million) by 86,400 seconds in a day results in a figure of 11.6 days. Remember, we are trying to conceive of dollars in terms of a comparable amount of time. Therefore, 11.6 days is the amount of time comparable to $1 million if one dollar equals one second.

Carry the example to the next level. Divide 1,000,000,000 seconds (1 billion seconds represents $1 billion) by 86,400 seconds per day produces 11,574 days – or 31.7 years. That is the equivalent of $1 billion translated into time consistent with our example.

Finally, if we divide 1,000,000,000,000 (1 trillion seconds representing $1 trillion) by 86,400 seconds per day, our arithmetic produces an astounding result. The quotient is 11,574,074 days or 31,710 years – in other words, a little more than 317 centuries. To state this in comparable terms, if one dollar was the equivalent of one second, $1 trillion would compare to 317 centuries!

Approached from a different perspective but still using simple arithmetic anyone can run their own analysis making large numbers comprehensible. The results are eye-opening. Check for yourself.

            A billion minutes ago is about the time Jesus lived.

            A billion hours ago mankind lived in the Stone Age.

            A billion days ago no-one walked on two feet.

            From this vantage point a discussion of the federal budget and the tax dollars to support it takes on real substance. We begin to understand how big is “big.”

Politicians and TV talking heads glibly toss around dollars in terms of billions and trillions. They must think we are stupid! Where do they think all the “bacon” comes from which they freely “bring home” to buy votes?

Income and corporate taxes, unemployment tax, gas tax, inheritance tax, IRS interest charges and penalties (tax on top of tax), Medicare tax, Social Security tax, telephone excise tax – these are just a few of the many dozens of federal taxes. State and local jurisdictions appropriate many more taxes of their own.

Not one of these taxes existed 100 years ago. That was when our nation was the most prosperous in the world, we had the largest middleclass in the world, we had no national debt and we typically had one breadwinner per family. What happened? Can you spell “p-o-l-i-t-i-c-i-a-n?” And to think we left Britain to avoid a tax burden!

There is a lot of loose cash floating around congress – your money and mine. If left in the hands of congress it remains at risk. Listening to congressmen and senators speak glibly of the big bucks they oversee, the risk becomes obvious. They would much rather take our money and spend it than take less money and conserve it. To hear them caterwaul you would think the federal government is perpetually short of funds – which is correct because congress never controls their spending addiction. Why should they when they can skillfully manipulate a gullible public to buy votes with more government programs?

There is a further inherent risk when dealing with large dollar amounts. For what it is worth, one million is one one-thousandth of a billion. And, one billion is one one-thousandth of a trillion. At this level, it is easy to lose several billion dollars in a mathematical rounding error. Those lost dollars are dollars best kept out of the hands of congress and the bureaucrats and in the hands of families trying to pay for college, health care or a mortgage. Lost dollars should not be laundered by the federal government. Why should we trust congressmen and senators to toy with these dollars as if they were playing Monopoly?

How big is “big?” Maybe that is the wrong question. The real question is: How much is enough?

 

Dennis M. Patrick can be contacted at P. O. Box 337, Stanley, ND 58784 or (JavaScript must be enabled to view this email address).

 

Click here to email your elected representatives.

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