In England, home of the English language, the word “trillion” is rarely used. Instead, the phrase “a thousand billion” is used instead. I recommend that the US follows suit. It is not that I am an anglophile, but rather that I believe we have reached the point where the number “one trillion” simply fails to capture just how big it (and the financial crisis that causes us to use this number on a regular basis) really is.
A thousand billion is, I think, a far better means to express just how big this number really is. After all, the famous phrase allegedly uttered by Senator Everett Dirksen about “a billion here and a billion there and sooner or later you’re talkin’ about real money” was his way of expressing the same concept – about a number that is one thousand times smaller than the trillion dollar number that is increasingly being used to express our current predicament.
Try this out – Economist Nouriel Roubini, who correctly forecast the scale of the current crisis, recently estimated that total losses on loans made by US financial firms and the fall in market value of the assets they are holding will be about $3.6 trillion, with US banks and broker-dealers exposed to about half that amount – or $1.8 trillion.
Based on his calculations, approximately another $1.4 trillion will be needed to restore banks to the level of capital they had before the crisis. Are you still sitting down? You shouldn’t be. These are enormous numbers that imply enormous problems. But the size of these figures is just not easily internalized by our brains.
Now see if this makes a difference – the total market capitalization of Citi, is now around $5 billion, while that of Bank of America is around $15 billion and Morgan Stanley is around $19 billion. The total fall in value of assets held by the US banking sector is around $3,600 billion creating a hole of about $1,400 billion. See what I mean.
As we increasingly read about TARP, stimulus, rescue packages and the rest, it is important to constantly remind ourselves that each trillion is actually a thousand billion dollars. Or, if you want to really put it in perspective, each trillion is a million million dollars (1,000,000 x $1,000,000).
I am sure that mathematicians and psychologists could explain why the numbers do what they do and the brain does what it does, but what is important to me is that we not lose sight of the size and scale of the world’s current economic and financial woes. The numbers are big – really big. So big that I simply don’t think that the word “trillion” does it justice.
So I, for one, will no longer use the word “trillion” but rather will revert to the “thousand billion.” It’s my tiny contribution to fostering a better understanding of the size and scale of the current problems confronting us all.
— Douglas Rediker
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