Orders of Magnitude

It's easy to let your eyes glaze over when you hear about millions or billions or trillions of dollars. Most people have a hard time conceptualizing much more than 100 million dollars. The zeros get too big to be put into perspective.

Let's say that I needed to borrow $100,000, for a short term sure fire no fail investment.  Waterboy, being a good friend and having just won the lottery gave me the money.  I'm a great credit risk; there is no doubt that I'll pay it back so he lent me the money interest free.

A month goes by.

Waterboy, having won the lottery, spent last month in Vegas celebrating.  Which is why he hadn't given much thought to me having his $100,000 bucks.  A couple of things happened in the last 30 days.  The IRS learned about Waterboy and his big Power Ball jackpot.  As I mentioned he was in Vegas and that didn't turn out as good as the lottery ticket.  He's still doing OK.  Just not as OK as he was last month.

Waterboy, being a good friend and all, and not wanting to make a big deal over $100,000 comes to me and asks (not nagging or trying to pressure me at all) when I might get around to paying him back the money I owe him.

I tell him that I'll pay back the whole amount in 1 million seconds.  Waterboy knows I can be a little eccentric so he nods and goes home to get out his calculator.  He figures out that at 60 seconds a minute and 60 minutes an hour and 24 hours a day that comes out to about 11.5 or 12 days.  That's not so bad.  He forgot to mention to Watergirl that he floated me $100,000 and another 12 days won't matter (probably).

Next week comes and I go to see Waterboy and I tell him I made a mistake and I won't have the money for another 1 billion seconds.  Waterboy, (he is such a good friend) buys me a beer and we smoke a cigar and he says "don't worry about it, I know you're good for the money".  As soon as I leave he gets out his calculator again.  He figures out that 1 billion seconds comes out to just under 32 years.

A little more time goes by and I see Waterboy again and I have to tell him that I made just one other teeny tiny mistake and that it will be 1 trillion seconds before I have his cash.  Instead of punching me in the nose (what a friend) he whips out his calculator and arrives at the conclusion that he needs to open an excel spreadsheet to do the math, and that it will be 3,170,979 YEARS before he sees a dime.

Remember this little story next time you contemplate the federal budget is $2.2 TRILLION dollars a year and we owe more than $222 Trillion in unfunded liabilities.  It's not just that there is a substantial difference between 1 million, 1 billion and 1 trillion, the three things aren't even on the same order of magnitude.