The Thrill of a Tril’

This article was originally printed in the April 2009 Issue of our Premium Newsletter.

The Washington Post recently noted “If counted out in $1000 bills, a million dollars would be a stack 4 inches high. To reach a billion dollars, that same stack of $1000 bills would have to be 358 feet tall. To reach a trillion dollars the stack would stand 67.9 miles high.”

Given that the current bailout obligations have the Republic on the line for $11.7 Trillion (see next page), that means Michael Jackson can spacewalk on $1000 bills stretching 815.5 miles high from Earth’s crusty shell. Or, we could knock that stack on its side and stretch it like a compacted Slinky from the New York Stock Exchange on Wall St. to the charming dirty south of Savannah, GA. How’s that for a finale to this fine mess?

On a more serious note, this amount of trillions means we are in some serious organic fertilizer over the long term. Popular finance blog Fund My Mutual Fund puts this debt in economic perspective:

[T]he ENTIRE U.S. economy is $13-14 Trillion. Our federal deficit is now $11 Trillion (and we’re now on pace to add $2 Trillion a Year with all the new spending/plans). The entire market capitalization of the Wilshire 5000 (the broadest measure of the stock market) was roughly $8 Trillion last I checked … call it $9 Trillion if you wish.

Wow. Talk about a house of cards. Seems to me that three realistic paths are ahead. In the best case scenario, we get the economy stimulated and pay down the debt over the next generation or longer while subsidizing the boomers’ entitlement programs (a super-sized obligation now that their retirement assets are significantly smaller). In the base case, we create another artificial economy that bubbles up and ultimately collapses again. In the worst case, the U.S. defaults on its debt and goes bankrupt. Only 1-800-Psychics knows how this plays out, but regardless of the details the real-life tragic comedy will surely qualify as “The Thrill of a Tril’.”

Another thought to ponder as the trillions add up: if you had a sweet annuity that paid $1 million dollars every day since Jesus died, you would be only 75% of the way to $1 trillion. This obviously begs the question of how much the credit default swaps would cost to protect that “A.D” annuity and whether counter-party risk then becomes a theological issue.

The only way not to cry is to laugh …

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