I was cruising my morning online news sources when I came across this little gem. I don't take credit for anything other than passing on my educational resources. CBC owns the rights to the following.
And by the way, things are 'fine' - in other words, it's bloody cold even here in the balmy Okanagan which means everyone is crabby but we'll survive. Gonna go listen to a harmonica player at Lorenzo's Cafe, just outside Enderby, tonight.
How much is $50 trillion anyway?
Last Updated: Wednesday, March 11, 2009 | 4:22 PM ET
Tom Allen, CBC News
Earlier this week, CBCNews.ca reported the results of a study conducted by the Manilla-based Asian Development Bank on the impact of the global financial crisis. It estimated that in 2008 worldwide losses in the currency, stock and bond markets totalled $50 trillion.
Numbers like this have become commonplace. On first reading, I found myself simply accepting that I understood what 50 trillion anything might be.
But I don't, really.
In February 1909, when Canada's first powered aircraft, Alexander Graham Bell's Silver Dart rose nine metres above frozen Baddeck Bay on Cape Breton Island, people were astonished. To tell them that Canadians would, in a matter of decades, fly at heights of nine thousand metres — and that it would be such an average experience that most wouldn't bother to look up from their magazines — would have been beyond imagination.
Today, millions of us are very comfortable flying along at 9,000 metres of elevation. I have experienced — and ignored — the sensation many times. I feel I know what it is like.
But I have no frame of reference for $50 trillion.
So, if you would, join me in a few basic calculations.
Fifty trillion is one million multiplied by 50 million.Could former prime minister Wilfrid Laurier, whose picture appears on the $5 bill, ever imagine a stack of money $50 trillion high? (iStockphoto)
For some Canadians, $1 million is an imaginable number. There are condominiums selling for more than that in our biggest cities.
At least, there were.
Still, for those of us in more humble surroundings, this can be illustrated in, well, more humble ways.
The smallest paper currency in this country is a $5 bill. Two hundred thousand $5 bills are worth $1 million. A stack of 200,000 $5 bills is roughly 20 metres tall — the height of a five-storey building, using the thickness of American bills as a guide. (The exact thickness of the Canadian $5 bill appears to be a closely guarded secret.)
Fifty million stacks of bills 20 metres tall each will give you a pile of money one million kilometres high.
Fly me to the moon
So, if you were in, say, St. John's, Nfld., and you stacked 50 million stacks of 200,000 $5 bills one atop of the other, you would reach the moon, turn back toward Earth, and then, after landing on Signal Hill, keep stacking, until you almost reached the moon again. (It is 384,400 kilometres away on average, says NASA.)
That's how big $50 trillion is — and we lost it.
That's the part that is really hard to understand.
Money, for most of us, is finite. There is only so much to spend. Some people have a great deal, many more people have just enough and many, many times more have nowhere near enough. But it is what it is.
We look in our wallets or our bank accounts and we know how much we have. If we choose to spend that money we won't have it anymore, but we will have something to show for it. We will have a stalk of celery, or admission to a movie, or a New Jersey-based drug company.
In this way of thinking, money is like water or energy: it may transform into something else, but we can track its journey. We know where it went; or if we don't, we can figure it out. We can find it.
But that is not the case with the pile of $5 bills that is almost three times the distance to the Moon. "Lost," in this case, is the wrong word. It isn't under a sofa cushion, or left in the kitchen like your keys. This thing, this pile of money, may never be found, no matter how hard we look.
That is the key. With money, at a certain point, we are no longer talking about a stalk of celery or a drug company. Money becomes less a thing and more a system of belief.
When Banker A sells Banker B a bundle of mortgages, some of which will never be repaid, Banker B isn't buying something tangible. Banker B isn't even buying necessarily the promise of something tangible.
He's buying and reselling the promise of a promise. In fact, it's a transaction remarkably like religion. It's faith: the implicit belief in something that can't be substantiated.
That's why that $50 trillion did just disappear. It never was a pile of bills. It was only the hope for that pile, a glowing dream in the collective minds of bankers and investors large and small, climbing higher and higher, a prayer with every step.
Whomever their God, the prayers weren't enough. When they fell, their religion tumbled with them, bringing with it some very tangible consequences: job losses in the hundreds of thousands.
We can thank our stodgy Canadian banking laws that for us the fall wasn't harder than it was.
Either way, the lessons are clear: step carefully. Know what you own and what it's worth.
Faith can accomplish great things, but if it starts to get cold and the air's getting thin, turn around. The view just isn't worth the climb.