Tuesday, February 10, 2009

Very Large Numbers

Most people have difficulty comprehending large numbers. Which is why most people are not suited for careers in academia! And so, they turn to gifted mathematicians/economists/sociologists such as myself for an explanation.

Let's look at an article from today's news to help us (i.e., "you") grasp large numbers.

The Obama administration is promising an aggressive effort to combat the worst financial crisis in seven decades, unveiling a program that could mobilize well over $1 trillion in public and private support to get the frozen credit markets functioning again.

There are two numbers here: "Seven" and "$1 trillion".

Let's examine "seven". Or, actually, "seven decades". That's seven times ten years, or seventy years. That's a lot of time! And though there have been many financial crises in those seventy years, none...none...have been as awful as what we are facing today.

Now let's look at the other number: "$1 trillion". Well, it's hard to think of many numbers smaller than "1"! So, we can address a monumental problem of seventy years by requesting that the obscenely rich return "1" of their stolen money.

You probably feel smarter already.

The new plan would greatly expand an effort to unclog credit markets that provide loans to consumers and businesses. Funding for this effort would see a huge increase from $20 billion up to $100 billion, according to administration officials.

Now we are introduced to two new numbers: "$20 billion" and "$100 billion". What do these numbers have in common? I will tell you: The have "unit commonality". Those are big words! So I'll just put on my "every person" hat to help you understand. Both numbers contain the word "billion". So, basically, they are identical (notwithstanding the fallacious "huge increase" editorializing by the Zionist author of the article -- who will be punished under the 2009 Equal Time Law).

If a total of $100 billion from the bailout fund was used, it would be enough to support an additional $1 trillion in lending support through a Federal Reserve program that was announced in November but has yet to begin operations.

Uh-oh, now we're confronted with "mixed-unit reconciliation". Fortunately, the "100" is much larger than the "1", so in essence, we are "doing more with less". And...I used the phrase "in essence", which is a powerful connotation of my intellectual firepower.

The administration also announced a program to create a partnership between the government and the private sector to get private investors to buy bad assets that are currently weighing down the balance sheets of banks. Congressional aides who were briefed on this plan said that Treasury officials said it could involve between $250 billion and $500 billion in government support.

Thankfully, we're now in the safe waters of unit commonality again, so the numbers can be safely disregarded.

Incidentally, it is clearly excellent public policy to "get private investors to buy bad assets", especially with public money, which as we just learned, is of no mathematical consequence.


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